OPEC+ Approves Small Supply Boost

By Published On: November 5, 2021Categories: Daily Market News & Insights

After a midweek selloff caused by struggling crude inventories, markets are climbing back towards the $80/bbl mark, with oil bulls trying to keep the rally alive. Yesterday, OPEC+ formalized their plan to increase production by just 400 kbpd, keeping supplies tight. Although the decision was no surprise, it does give bullish traders confidence to keep bidding up prices.


The midweek selloff stemmed from an inventory update on Wednesday, in which the EIA reported that crude stocks rose by over 4 million barrels the week prior. On the fuel side, though, inventories continue falling as refineries go through planned maintenance in different parts of the country. Refinery utilization is around 85% right now, meaning refiners are only using 85% of their total capacity. That’s down from over 90% earlier this summer. Utilization is right around seasonal averages, but demand remains strong – and the upcoming holiday season should see plenty of travel. Climbing crude inventories should help keep prices from rising too much, but tight fuel markets will still cause some pain at the pump this year.


Earlier this week, the Federal Reserve announced plans to phase out their bond-buying program by next June, removing a major stimulus for the US economy. Despite the announcement, stock markets rallied, and oil has seen little change outside of the inventory-induced drop. Traders seemed happy to give up the stimulus in exchange for curbing inflation, which can reduce the value of trading gains. Although all seems healthy now, it’s possible we could see changes in the US dollar and interest rates rattle financial markets – including oil – in the future.

This article is part of Daily Market News & Insights


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