Crude Oil: Demand Firms Spot Prices, But Some Cargoes Go Unsold

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The physical market is more buoyant, partly because stronger margins boost refiners’ demand and feed into firmer spot prices, and partly because oil switching and a colder-than-expected winter have brought buyers back to the prompt market. But there is no sign of undersupply. Oil traders had surmised that after depleting inventories to their pre-pandemic level, Opec would keep prices attractive to boost crude demand in the peak winter demand months, especially in Asia. But the recent hike to Saudi official selling prices (OSPs) has proved that wrong: Opec’s policy of giving back some margin to refiners is over. Even if global inventories are low, the Opec-plus decision to stick with a steady 400,000 b/d addition is meant to account for seasonal effects and keep the resulting crude builds under control in the first half of 2022.

Crude Oil, Oil Spot Markets, Oil Prices
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