WTI is starting the week off better bid, eyes on $82.00

• WTI bulls stay in charge at the start of the week and eye the $82 area.
• Markets continue to price the OPEC+ Group rebuff of the US call to boost supplies.

Crude prices climbed by more than 2% on Friday on renewed supply concerns after OPEC+ producers rebuffed a US call to accelerate output increases even as demand nears pre-pandemic levels. On Monday, the bulls remain in control and West Texas Intermediate (WTI) crude oil has added 0.2% so far. WTI has moved from a low of $81.07 to a high of $81.75 as traders continue to price the OPEC+ Group rebuff of the US call to boost supplies beyond its schedule of 0.4-million-barrels per day monthly increases.

The cartel's decision came as it expects demand in the fourth quarter of this year and the first quarter of next year will be weak. ''OPEC's message to consumer nations was resoundingly clear—not only has the group of producers eased fears of a faster pace of output hikes, but it has clarified that member nations won't compensate for those who are underproducing relative to their quotas,'' analysts at TD Securities explained. ''This suggests that the very cautious pace of output hikes should keep energy markets on a tightening trajectory in the near term.''

Meanwhile, the number of oil rigs operating in the US rose by six this week, according to data compiled by energy-services firm Baker Hughes (BKR). Reuters reported that the count ended at 450 in the seven days through Friday, quoting Baker Hughes. ''A year earlier, the US had 226 oil rigs in operation. Oil and gas rigs in the US rose by six to 550. Gas was unchanged at 100 rigs, the Houston-based company's data showed. In the same period of 2020, there were 71 gas rigs and three miscellaneous rigs in operation.'' Reuters also reported that, overall, ''there were 300 rigs operating a year ago. Across North America, oil and gas equipment was unchanged at 710, up from 386 at the same point last year. In Canada, the count was down by six to 160, compared with 86 operating during the same period last year. ''

The Iran wild card is back

Last week, the United States on Friday hit Iran with a fresh set of sanctions as President Joe Biden prepares for a key weekend meeting with European leaders to discuss the possible resumption of nuclear talks with the Islamic Republic. It was been reported last week that Iran's talks with world powers aimed at reinstating a 2015 nuclear deal will resume on Nov. 29. Iran's top nuclear negotiator, Ali Bagheri Kani, was reported to have spoken and announced the date as Western concerns over Tehran's nuclear advances grow.

Analysts at TD Securities explained that their ''proprietary gauge of energy supply risk has only managed to wobble in response to the Iran wildcard, shrugging off the aggressive decline in European natural gas and Chinese coal prices. This reflects the fact that the right tail in energy supply risk is fat, despite the decline in spot prices, as the market's ability to withstand a shock this winter is extremely low.''