Oil prices fall after OPEC + confirms return of supply amid fluctuating demand

TOKYO (Reuters) - Oil prices fell on Thursday after OPEC agreed to stick to its policy of gradually returning supply to the market at a time when coronavirus cases around the world are rising and many US refineries, a key source of oil demand, are down.

Brent crude was down 16 cents, or 0.2 per cent, to $71.43 a barrel by 04:22 GMT after falling 4 cents on Wednesday. US oil fell 23 cents, or 0.3 per cent, to $68.36 a barrel after rising 9 cents in the previous session.


 
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The Organisation of Petroleum Exporting Countries (OPEC) and other producers, including Russia, collectively known as OPEC , agreed on Wednesday to continue a policy of phasing out record production cuts, adding 400,000 barrels per day (bpd) to the market each month.

However, OPEC raised its demand forecast for 2022 while facing pressure from the Biden administration, which said it was "pleased" that the group had reaffirmed its commitment to increasing supply.

"What is not so certain ... is whether demand can grow as fast as OPEC and the market predicts, given the risk of new restrictions to tackle the unresolved spread of Covid mutants," said Rystad Energy head of oil markets Bjornar. Tonhagen," the note said.

In the US, it could take weeks to restart refineries in Louisiana after Hurricane Ida swept through the region, with operators facing power and water shortages that are likely to reduce demand for oil.

Energy companies have struggled to restart platforms and pipelines in the Gulf, with about 1.4 million bpd of oil still unavailable, the US offshore regulator said.

US crude inventories fell by 7.2 million barrels and refinery deliveries rose to a record high despite a rise in coronavirus infections across the country, the Energy Information Administration said on Wednesday. [EIA / S]

"Stocks look set to rise in the coming weeks as reports suggest it will take longer for refineries to resume operations than oil production after Hurricane Ida," said Kieran Clancy, a commodities economist at Capital Economics.