Oil Prices Slide as ‘Net-Zero Emission’ Plan Generates Reactions
Crude oil prices slide on Thursday as International Energy Agency (IEA) net-zero emission report continues to generate reactions. Many oil majors however keep their options open while Africa Energy Chamber thinks the proposal will not work for Africa countries.
Reacting to the report, the Organisation of Petroleum Exporting Countries (OPEC+) and allies had slammed IEA’s for saying there should be no further investment in fossil fuel in order to meet the 2030 target.
Also, the oil market is expecting a possible output increase as Iran remains optimistic that nuclear deal talks with the United States would result in the removal of sanctions placed on the country.
The oil market has already factored this information into investors’ expectations, though Goldman Sachs also reiterates that oil will hit $80 per barrel in 2021. International benchmark Brent crude traded at $68.34 per barrel, after falling 0.56% from $68.73 a barrel on Wednesday.
American benchmark West Texas Intermediate (WTI) was trading at $65.86 a barrel at the same time with a 0.52% decrease after ending the previous session at $66.21 per barrel.
Struggling to break out, oil prices have been fluctuating between $68 and $70 for a while, as investor caution is overshadowing positive short-term signals.
A slew of oil and gas analysts maintained that negotiations between the United States and Iran to revive the 2015 nuclear agreement and lift Iranian oil export sanctions are downside risks to a price surge.
The prospect of Iranian supplies re-entering the market has pressured prices. Iran and global powers have been negotiating since April about Washington lifting sanctions on Iran, including its energy sector, in return for Iranian compliance with restrictions on its nuclear work.
Due to uncertainties, oil investor have remained cautious over the extra barrels that Iran will bring to the market. However, many analysts agree that “the expected global demand recovery this summer seems strong enough to absorb the effect.”
Both the OPEC and IEA, taking into account US transportation fuel data and the acceleration in vaccination programs in many regions, forecast in their latest oil market reports that oil demand would surge by 6% in 2021, particularly in the second half of the year.
Cementing their forecasts, US crude stocks fell by more than the market expectation last week, signaling a crude demand rebound in the US, the world’s largest oil consumer.
US commercial crude oil inventories fell by 1.7 million barrels, or 0.3%, to 484.3 million barrels, relative to the market expectation of a fall of 1.3 million barrels, according to data released by the country’s Energy Information Administration (EIA) on Wednesday.
Oil Prices Slide as ‘Net-Zero Emission’ Plan Generates Reactions
