Oil Prices Drop below $80 Ahead of OPEC+ Meeting
Oil prices dropped below $80 per barrel amidst demand, supply risks in the global commodity market ahead of the Organisation of Petroleum Exporting Countries and allies (OPEC+) Joint Ministerial Monitoring Committee meeting on Thursday.
Oil prices were lower, with Brent crude down 0.7% at $79.75 per barrel and the US West Texas Intermediate crude down 0.8% at $76.56 per barre on
Both benchmarks started the week with downward movement following an attack in the Israeli-occupied Golan Heights which could further affect the supply side.
Escalating geopolitical tensions in the Middle East, home to a vast majority of global oil reserves, despite cease-fire negotiations, increases supply risk in the markets.
On Saturday, a missile attack was carried out on a football field in the town of Majdal Shams in the occupied Golan Heights, killing 12 people.
Israel blames Hezbollah for the attack, but the Lebanese group denied playing any role. Fear over a full-blown war between Israel and Hezbollah has grown amid an exchange of cross-border attacks between the two sides.
The escalation comes against the backdrop of a deadly Israeli onslaught on Gaza which resulted in the death of more than 39,300 people since last October.
Meanwhile, negotiations regarding the cease-fire in Gaza and the exchange of prisoners between Hamas and Israel are currently stalled after the postponement of the Israeli delegation’s visit to next week, which was initially scheduled for Thursday.
The market prices have weakened as the outlook for crude demand in the world’s largest crude oil importer remained bleak. Prices continue to be depressed by concerns about demand in China as it grapples with a slowing economic recovery.
This week, market players will be watching the US Federal Reserve’s (Fed) meetings in a bid to gauge the oil market trajectory.
Fed will review its policy on July 30-31. While investors expect the bank to keep rates unchanged, they will also look for further evidence that a rate cut will happen at the September meeting.
Oil prices traded lower for a third consecutive week. ICE Brent settled 1.82% lower over last week and with the market trading at a little over US$81 per barrel, it’s not too far away from the key psychological US$80 level, ING said in a note.
Analysts said the weakness in the market comes ahead of the OPEC+ Joint Ministerial Monitoring Committee meeting, which will be held on Thursday.
The meeting will be held online, and while the committee is not expected to recommend any changes to output policy, the more recent weakness would be a concern, particularly if we were to see Brent break below US$80/bbl.
“However, if there are any surprises, they would likely come in the form of delaying the start of the gradual easing in supply cuts, which is set to start in October”, ING said. #Oil Prices Drop below $80 Ahead of OPEC+ Meeting
