Oil is on the rise, possible face-to-face between Biden and OPEC

Brent ends up 1.02% to $ 79.70 and WTI ends up 1.06% to $ 76.75.

Oil prices recovered on Monday after ten difficult days, with the market anticipating a possible face-to-face between US President Joe Biden and OPEC.

A barrel of Brent from the North Sea for delivery in January ended in London, up 1.02% to 79.70 dollars.

In the second part of the session, it even crossed the threshold of 80 dollars, before falling back slightly.

In New York, a barrel of West Texas Intermediate (WTI) for the same month, of which it was the first day of use, he gleaned 1.06%, to finish at 76.75 dollars.

After hitting a low of 74.76 dollars, a drop of more than 10% in ten days, the WTI also regained its height at the end of the session.

Weighted down by the new wave of cases of coronavirus which is hitting Europe and has led to reconfinements in several countries, the prices could have given up even more ground after the announcement, by several media of a coordinated use of the strategic reserves of several country, spurred on by the United States.

In addition to China, which has already indicated, last week, to dip into its stocks, Japan, South Korea and India could join the movement.

“No decision has been taken”, assured a spokesman for the American National Security Council (NSC), while indicating that “conversations (were) in progress” and that the United States “(envisaged the use) of a series of tools when needed ”.

But the prospect of resorting to strategic reserves “was well anticipated” by the market, recalled Bill O’Grady, head of market strategy for Confluence Investment Management.

“It was news (likely to lower prices) which had triggered preventive sales, and which led to purchases when it was released,” explained the analyst.

The inflection of prices was also reinforced by information from the Bloomberg agency, according to which the Organization of the Petroleum Exporting Countries (OPEC) and their allies of the OPEC + agreement would be ready to review their production schedule in the event of a use of strategic reserves.

“OPEC will probably reduce its production to some extent in reaction to the pumping of reserves, or at least threaten to do so,” said Mr. O’Grady.

In the past, OPEC has only rarely reacted to a massive use of American strategic reserves, which were often the result of an armed conflict (1991 and 2011) or a climatic event (2005).

“But this time it’s different,” says O’Grady. “It was the United States and other countries that decided to lower the prices. We rarely see a use of reserves for what appears to be pure market manipulation. ”

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