OPEC+ allowed crude oil to hit a new high impact at the $80 mark ICE raised the cloth oil margin

On Tuesday, October 5, Eastern Time, the Intercontinental Exchange (ICE) announced that it would raise the margin of Brent crude oil futures by 8.7%, effective from the close of trading on October 7, and issued related margin call notices on October 8.

On the day before the ICE operation, on Monday, OPEC+ and other countries that jointly cut production agreements such as Saudi Arabia and Russia just met to decide to implement the original plan and continue to increase production by 400,000 bpd per month in November, without expanding the scale of production increase. This decision came as a surprise to many analysts. They originally expected that the current global energy supply is tight, due to the meteorological forecast this year will encounter cold winter gas, natural gas demand soared, the world is facing the threat of natural gas crisis, in this situation, OPEC+ should accelerate the withdrawal of production cuts.

Carsten Fritsch, a commodity analyst at Commerzbank, has pointed out with disappointment in the report that in view of the sharp rise in oil prices and the tight supply situation in the market, a number of market participants had previously hoped that OPEC+ would significantly increase its oil supply.

On Monday, international crude oil accelerated its rise after the OPEC+ meeting, closing higher collectively for the second consecutive trading day. Brent December crude oil futures closed up 2.50% at $81.26 a barrel, a new high since October 16, 2018, and closed at the important psychological mark of $80 for the first time in about three years. U.S. WTI November crude futures closed up 2.29 percent at $77.62 a barrel, the highest for the contract since November 11, 2014.

Crude oil continued to move higher on Tuesday. Brent crude oil rose below $83 in early trading in U.S. stocks, rising more than 2% during the day, closing up 1.6% to $82.56 / barrel, two consecutive days of new highs since October 2018. U.S. oil in the U.S. stock market in the morning session broke through $79, approaching the $80 mark, the day rose more than 2%, and finally closed up 1.69%, at $78.93 / barrel, the highest since October 2014, two consecutive days to hit a new high of nearly seven years.

The media pointed out that indicators of various oil markets suggest strong crude oil demand, such as the bullish market structure representing the price of the near-month contract higher than that of the far-month contract - the premium of Brent crude oil futures has reached $0.79 / barrel, compared with $0.74 / barrel a week ago.

Commerzbank analyst Fritsch expects a large supply gap in the fourth quarter of the oil market after OPEC+ has decided to increase production as planned, as oil demand is much stronger than expected.

Citi expects OPEC+ to be forced to meet to reconsider its current oil production policies due to tighter supply in the market before the end of November. Citi's head of commodities research, Ed Morse, commented on Monday: "Even if not before November, eventually, they (OPEC+) will meet again to try to bring more oil back to the market." Morse added that "almost all analysts around the world" and OPEC have different views of demand growth over the next two months.

Alex Kuptsikevich, a senior market analyst at FxPro, pointed out that oil prices have continued to rise almost without interference over the past seven weeks, accumulating more than 25%, and this does not mean that the potential for growth has dried up. Compared with natural gas and coal, the rise of crude oil is obviously lagging behind a lot, and there may be the potential for a big rise.

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