SINGAPORE Reuters - Oil prices fell more than 1% on Friday because of concerns that a global supply surplus could swell in the first quarter after a coordinated release of crude reserves among major consumers, led by the United States.
Brent crude futures declined for a third session, falling 96 cents, or 1.2%, to $81.26 a barrel by the end of the day at 0130 GMT. U.S. West Texas Intermediate WTI crude was down $1.35, or 1.7%, at $77.04 a barrel. There was no settlement for WTI on Thursday because of the Thanksgiving holiday.
U.S. President Joe Biden's administration announced on Tuesday that they plan to release millions of barrels of oil from strategic reserves in coordination with other large consuming nations, including China, India and Japan, to try to cool prices.
According to a panel of experts, the OPEC estimates that a 400,000 barrels per day bpd surplus will be reached in December, a 2.3 million barrels per day surplus in January and 3.7 million barrels per day in February if consumer nations go ahead with the release, the release is likely to swell supplies in the coming months.
The outlook of the meeting between OPEC and allies, a group known as OPEC on December 2 to decide on immediate production, is clouded by rising surplus oil. The group is to decide whether it will increase output by 400,000 barrels per day in January.
The benchmark contracts are set to post their first weekly gain in nearly a month, as the total volume of the crude reserve release estimated at 70 million to 80 million barrels was smaller than expected by market participants.
Since the volume is small, I think it is aimed at easing tightness in supply rather than having a big impact on oil markets, Tsutomu Sugimori, president of the Petroleum Association of Japan PAJ, told reporters late on Thursday.