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Oil Prices in New York Rose 3.4% to $43.52 on Wednesday
The main crude oil futures contract in the New York market closed moderately higher, briefly exceeding $46 during the session. There are rumors in the market that Saudi Arabia may significantly reduce production in January next year.As of 2:30 pm Eastern Time on Wednesday (3:30 am Beijing time on Thursday), the January crude oil contract on the New York Mercantile Exchange rose $1.45 to close at $43.52, an increase of 3.4%. The contract hit an intraday high of $46.17 earlier.
Phil Flynn, vice president of Alaron Trading in Chicago, pointed out that today’s surge in oil prices can be attributed to market rumors that Saudi Arabia is taking preparatory measures to reduce production. “There is news that Saudi Arabia has issued a notice to oil customers, and it is estimated that next year There will be significant cuts in January. We will try to get specific numbers on the cuts, but now that Saudi Arabia has notified its customers, it most likely means that significant cuts are coming."
He also said: "The production reduction may be 2 million barrels per day or even higher. Now it seems that a production reduction of more than 2 million barrels may be better. The market seems to be paying more and more attention to this potential production reduction."
Saudi Arabia is the largest oil producer in the Organization of Petroleum Exporting Countries (OPEC). Saudi Arabia is considered one of OPEC's most important players as it holds about one-fifth of the world's total proven oil reserves.
In recent days, there have been increasing signs that OPEC is likely to agree on another production cut at its meeting on December 17. In October this year, OPEC announced a production cut of 1.5 million barrels per day, but OPEC made no decision to reduce production at the November meeting.
The New York oil market was volatile today, with oil prices falling in early trading after the Energy Information Administration (EIA), a subsidiary of the U.S. Department of Energy, announced that the supply of crude oil and gasoline increased month-on-month in the past week.
The EIA pointed out that in the week ended December 5, U.S. crude oil inventories increased by 400,000 barrels to 320.8 million barrels, total motor gasoline inventories increased by 3.8 million barrels, and distillate inventories increased by 5.6 million barrels.
James Williams, an analyst at WTRG Economics, said: "The EIA report is extremely bearish, although crude oil supply increased only slightly month-on-month."
He further pointed out: "Inventories of all major petroleum products increased significantly, while total oil inventories increased by 6.7 million barrels. This should intensify the downward pressure on gasoline and heating oil, which in turn will suppress crude oil prices. Bulls who are optimistic about OPEC production cut news today There will be a fierce battle between the conservative faction and the bearish faction who pay attention to the EIA report."
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