Oil Heads into Bearish Sequence as OPEC+ Resolves Impasse
Oil heads into the bearish sequence after the crude prices drop Monday as the Organisation of Petroleum Exporting Countries and allies (OPEC+) resolve production agreement impasse between the Saudi and United Arab Emirates.
Fear of an increase in crude supply has caused prices to fell sharply on Monday after OPEC+ agreed to boost output, sparking concerns over demand outlook amidst delta-variant spreads.
In the just concluded week, oil prices were volatile across grades as some countries continue to battle with a covid-19 new variant that appears to be very much contagious.
Today, Brent crude price slowdown $2.01 to $71.58 a barrel while West Texas Intermediate was down $2.06 to $69.75 a barrel.
On Sunday, OPEC+ ministers agreed to increase oil supply from August to cool prices that this month hit their highest level in more than two years.
Read Also: OPEC+ Cancels Policy Meeting after Saudi-UAE Stand-Off
The group of members of the OPEC and allies such as Russia also agreed to new production shares from May 2022.
In a commentary, Goldman Sachs said it remained bullish on the outlook for oil and the agreement was in line with its view that producers “should focus on maintaining a tight physical market all the while guiding for higher future capacity and disincentivising competing investments.
It had projected that oil prices will hit $80 a barrel in 2021.
Recalled that in 2020, OPEC+ cut output by a record 10 million barrels per day (bpd) amid evaporation in demand the pandemic developed, prompting a collapse in prices with U.S. oil futures prices at one point falling into negative territory.
OPEC+ producers have gradually eased their output curbs, which now stand at around 5.8 million bpd.
Analysts had said the risk of a production war raises fears of a March 2020 scenario, when Saudi Arabia decided unilaterally to increase its production following the failure of discussions with Russia.
Oil Heads into Bearish Sequence as OPEC+ Resolves Impasse
