Price Performance Indicators
The COFR rupiah crude oil contract ended the last session of last week with a sharp daily correction, after meeting important resistance – finally recording a weekly correction of 0.89% to the level of Rp 1,155,800,- per barrel. A number of different important sentiments influenced the movement of oil prices last week, starting with the focus from OPEC+ and Aramco, to the release of US inflation data on Friday which gave a boost to the USD.
On the positive side, In a meeting that took place on Thursday, OPEC and its allies agreed on a production quota in accordance with the previous agreement, which was to increase production by 400 thousand bpd for December. The OPEC+ decision at the same time ignores demand from the US and other major oil importers to add more supplies to the market. Meanwhile, Saudi Arabia's state oil producer, Aramco late Friday announced an increase in the selling price of oil for December delivery, just a day after OPEC+ "comforted" the market. The official December selling price (OSP) for destinations in Asia, its main customer, rose $1.40 to $2.70 per barrel, while those for Northwest Europe were given a discount of 30 cents per barrel over ICE Brent and to the US plus $1.75 per barrel above the ASCI ( Argus Sour Crude Index).
Meanwhile, the negative sentiment that weighed on the movement of oil prices started from the Short-Term Energy Outlook report released on Tuesday by the EIA, which projects that the global oil market will experience an oversupply that will trigger prices to fall again early next year. Finally, the release of US inflation data that gave the USD a boost to climb to a nearly 16-month high over the weekend helped make USD-denominated crude more expensive for holders of other currencies – reducing its appeal for a moment.
Market are Waiting on Joe Biden's Decision
Behind it all, is a coalition of 11 Democratic senators who on Monday urged President Joe Biden to take extreme steps to curb rising gas prices, including banning crude exports and releasing the US Strategic Petroleum Reserve. On the same day, Energy Secretary Jennifer Granholm said President Biden this week plans to announce details of his short- and long-term strategy to deal with the emerging energy crisis. Looking ahead, the market's waiting for the final decision from President Joe Biden, is still anticipated as a policy aimed at dampening further price spikes.
US - Retail Sales m/m
US - Industrial Production m/m
EIA - Crude Oil Inventories
Source: ICDX Research