Oil prices declined on the first day of November as China’s release of gasoline and diesel reserves helped to reduce concerns regarding tight global supply, while investors cashed in ahead of a meeting of major oil producers that could increase future production targets.
On Monday, Brent crude futures fell 46 cents, or 0.6% to $83.26 a barrel by 07:46 GMT. Last week, on Friday Brent crude futures, gained 6 cents.
U.S. West Texas Intermediate (WTI) crude futures dropped 64 cents or 0.8% to $82.93. On Friday, WTI crude futures gained 76 cents.
Oil prices declined after China’s decision. The second-largest economy in the world said in a rare official statement that it released reserves of the two fuels to increase market supply and support price stability in some regions. The county wants to stabilize oil prices.
Oil prices and OPEC
Analysts and investors are waiting for the meeting of the Organization of the Petroleum Exporting Countries (OPEC), Russia, and their allies together called OPEC+. Analysts expect OPEC+ them to stick to a plan to add 400,000 barrels per day of supply in September.
Money managers made an important decision by cutting their net long U.S. crude futures as well as options positions in the week to October 26.
Last week, oil prices jumped to multi-year highs thanks to OPEC+’s decision. Opec and its allies decided to keep its planned output increase rather than raising it on global supply concerns.
U.S. President Joe Biden asked major G20 energy producing countries with spare capacity to increase production to ensure a stronger global economic recovery.
Still, Iraq’s state oil marketing company, SOMO, does not agree with Biden’s decision. On Saturday, the company said Iraq sees no need to take any decision to increase its production capabilities beyond what has already been planned for OPEC countries.
Another oil producing country Kuwait supports the plan to increase global oil supply in accordance with OPEC+’s decision.
Encouraged by rising oil prices, energy companies from the U.S. continued to add oil and natural gas rigs. They added oil and natural gas rigs for the 15th month in a row in October.
Chevron and Exxon are looking to add drilling rigs in the Permian shale basin. In 2020, companies reduced the number of employees and output in the Permian shale basin.