On Tuesday, crude oil prices hit a multi-year high as OPEC+ stuck to its planned output increase instead of raising it further.
Brent crude was closed at USD82.56/barrel, going up by 1.6% or USD1.30 after hitting the highest level in three years at USD83.13/barrel earlier. US WTI settled at USD78.93/barrel following the rise of 1.7% or USD1.31 after reaching the highest level in seven years earlier at USD79.48/barrel.
Previously on Monday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to stick to its July deal to increase oil production by 400,000 bpd each month until at least April 2022. On the same day, both Brent and WTI gained more than 2% as a reaction to the news.
Analyst Phil Flynn of Price Futures Group commented, "The market is realizing we are going to be undersupplied for the next couple of months and OPEC seems to be happy with that situation.”
OPEC+ Joint Technical Committee (JTC) forecast in September that in 2021 there would be a 1.1 million bpd supply deficit which could turn into a 1.4 million bpd surplus next year.
According to a source, the alliance is wary that a fourth global wave of COVID-19 infections could hit the demand recovery so they maintain the previous commitment despite pressure to boost output.
Moving onward, as natural gas prices are surging at the same time, some analysts expect that crude prices are likely to remain supported even though there could be a short-term pullback.
