A jump in crude oil prices, reaching the highest level since January 2020
A jump in crude oil prices, reaching the highest level since January 2020: The American Petroleum Institute (API) announced yesterday,
Tuesday (February 2, 2021) that crude oil decreased by 4.261 million barrels from US crude oil inventories for the week ending January 29,
in addition to a decline in gasoline, distillates, and Cushing. Analysts expected an increase in stocks of 446,000 barrels this week.
The API had already reported a decline in the crude oil of 5.272 million barrels from US crude oil inventories
for the previous week ending January 22nd, after analysts had expected a small increase of 430,000 barrels.
While the US Energy Information Administration recorded a decline in inventories by 9.9 million barrels.
Crude oil price Fluctuations for this week
Oil prices rose on Tuesday before the data was released, and traders were optimistic after OPEC had committed in the previous session to the promised production quotas.
Ahead of Tuesday’s data release, WTI for March delivery rose $ 1.20 per day (+ 2.24%) to $ 54.75, up to $ 2.25 since this time last week.
Meanwhile, benchmark Brent crude for April delivery rose $ 1.17 a day (+ 2.08%), reaching $ 57.52 – up to $ 1.70 over the course of the week.
West Texas Intermediate price changes continued and rose by 1.21 dollars to settle at 54.76 dollars a barrel on the New York Mercantile Exchange.
Brent crude rose $ 1.11 to close at $ 57.46 a barrel on the ICE Futures Exchange.
After the data release, at 4:33 PM. The West Texas Intermediate (WTI) was trading,
according to EDT, at $ 54.86, while Brent crude was trading at $ 57.62.
The rates of energy production for this week
According to Energy Information Administration data, US oil has dropped from 100,000 barrels a day to 10.9 million barrels a day,
after the end of the six-week consecutive plan of the rate of 11 million barrels a day.
Some opinions signal that the market is in shortage of oil, but few of them expect a rapid recovery in US crude oil production.
The API also announced that gasoline inventories decreased by 240,000 barrels for the week ending January 29,
compared to last week’s increase of 3.058 million barrels. While analysts had expected an increase of 1.134 million barrels this week.
Distillate stocks decreased by 1.622 million barrels for the week, adding to last week’s increase of 1.398 million barrels,
while Cushing’s inventories fell by 1.885 million barrels.
OPEC commits to 99% of the cuts
According to Bloomberg, OPEC members almost fully committed to production cut quotas last month at 99%,
also, the compliance level was based on preliminary estimates and will be reviewed by the Group’s Joint Technical Committee (JTC) tomorrow.
OPEC also agreed to cut 7.2 million barrels a day from combined production in January.
The decision is seen as a compromise decision by Saudi Arabia and Russia,
which proposed adding 500,000 barrels a day to the group’s production per month in February and March.
The organization agreed to keep the production cuts. At 7.2 million barrels per day.
It is expected that these decisions will be confirmed or canceled after tomorrow’s meeting.
Global demand for oil has been improving but supply has also increased.
OPEC will likely stick to current production cuts, with Saudi Arabia cutting an additional 1 million barrels a day to keep prices in the market up.
OPEC’s total oil production increased in January, for the seventh month respectively.
This happened in spite of the significant cuts made by Saudi Arabia and the compensatory production cuts in Iraq,
which the state declared to implement in January and February to compensate for its lack of commitment last year.
Some specialists believe that the increase has been expected and natural, with the production ceiling rising since January.
The largest additions to OPEC total last month were from Saudi Arabia and Iraq despite their commitments.
The third-largest output growth came from Iran, which is ramping up production and exports lest the lifting of sanctions by the Biden administration.
Iraq has now said it will cut an additional 250,000 BPD from December 2020 levels in January and February to make up for last year’s surplus.
That would make it 3.6 million barrels per day.
Increase in Iraq’s exports of crude oil in January
Data from the Iraqi Ministry of Oil showed a slight increase in Iraqi’s oil exports in January 2020 compared to December 2020,
referring that Iraq is once again looking to maximize oil revenues with the risk of breaching the OPEC agreement.
Iraq’s oil revenues increased in the first month of 2021, thanks to high oil prices. Iraq generated $ 4.74 billion in oil revenues in January,
at an average oil price of $ 53.294 per barrel.
Reuter’s data showed that the price rose by more than five dollars a barrel from the average price of $ 47,765, at which Iraq sold its oil in December.
Iraq, which is the second-largest producer in OPEC, saw its crude oil exports increase to 2.868 million barrels per day in January,
up from the 2.846 million barrels a day exported in December 2020, according to Iraqi Oil Ministry data.
According to oil ministry data, last month, Iraq’s average exports from southern export ports in Basra reached 2.77 million barrels a day,
up from 2.75 million barrels a day exported from the south in December.
Exports of Kirkuk through the Ceyhan pipeline averaged 98,000 barrels a day in January 2021,
which is also slightly up from the previous month.
Some statements of Iraqi officials
Ali Nizar, vice president of the Iraqi Oil Marketing Company (SOMO) in Baghdad, previously stated that Iraq would pump less oil in January and February to make up for last year’s surplus.
“In January and February, Iraq plans an average daily production of 3.6 million barrels. This compares with 3.85 million barrels a day for December,” Ali Nizar said to Bloomberg.
Nizar also said that exports would drop to about three million barrels a day from 3.3 million barrels a day in December as long as the Kurdistan Regional Government agreed to reduce its oil production as well.