Oil records first weekly decline since May
Oil records first weekly decline since May: Crude oil prices declined in trading this week after OPEC + members disagreed in determining production policies.
West Texas Intermediate crude fell slightly this week by 0.79% to the U.S. $74.56 per barrel.
In the meantime, Brent crude rose by 0.81% to U.S. $75.55 per barrel.
The factor affecting the pace of oil prices is the dynamics of OPEC +.
Earlier last week, the OPEC+ meeting was canceled because no agreement was reached on the direction of future production policies.
Evest closely follows what’s happening in the commodity trading market,
as well as all the developments regarding the OPEC meeting,
although there are chances of an agreement soon.
The OPEC crisis is still in effect.. Prices may continue to be negative
Initially, OPEC + wanted to reach a formal agreement to temporarily increase oil production in August and December 2021.
After that, the 9.7 million barrels per day production cut was again in effect and was even extended until the end of 2022.
Abu Dhabi agreed to increase production but did not want to extend production cuts. In the end,
the discussion was stalemated, and the meeting was postponed indefinitely.
However, there is still hope that OPEC + will hold another meeting in the near future.
It was Russia that tried to mediate differences of opinion between Saudi Arabia and the United Arab Emirates.
“They still have time to make an agreement,” a Russian source told Reuters.
We hope to meet again next week and reach an agreement.”
Another source revealed that Kuwait is also trying to reconcile Riyadh with Abu Dhabi.
Meanwhile, the White House is reportedly continuing to monitor developments in OPEC + and talk to Saudi Arabia and the Emirates.
“We encourage the OPEC + meeting to reach an agreement. We support efforts towards affordable and sustainable energy prices.
” White House spokeswoman, Jane Psaki, said.
So far, reconciliation efforts have yielded no results. There’s no clear sign that OPEC + will meet again.
While this evidence of strong demand from the world’s largest oil consumer has reassured investors slightly, oil is on track to record its first weekly decline since late May.
Declining inventories reassure the market about prices
Oil prices rose again on Friday, reassuring the market about declining U.S. crude reserves,
but it remained concerned about the absence of an agreement from the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC +).
The price of a barrel of Brent North Sea crude for September delivery was $74.80 in London in the morning, 0.92% higher than the previous day’s closing.
In New York, West Texas Intermediate crude barrel for August rose by 1.15% to $73.78.
U.S. West Texas Intermediate’s crude temporarily fell below $71 on Thursday before rising as U.S. stocks fell.
Crude oil inventories fell 6.9 million barrels to 445.5MB for the week ending July 2,
according to the weekly report of the United States Energy Information Agency.
While if this evidence of strong demand from the world’s largest oil consumer has reassured investors slightly,
oil is on track to record its first weekly decline since the end of May (-1.8% for both Brent and West Texas Intermediate).
According to analysts, the market is affected by “concerns that major producers will produce more shares due to the problems that OPEC + is experiencing.”
They added: “But we haven’t really seen momentum,” and prices remained far from the hardest-hit zone on Tuesday ($77.84 for Brent and $76.98 for West Texas Intermediate Crude).
They indicated that “the most important factor that prevents prices from rising further,
is the fear that the delta variant will slow the global economy and thus demand growth.”
The focus is on the delta variant and its impact on prices
The delta variant share, considered to be more contagious and dangerous in new pollution cases,
is now dominant in a large number of countries, some of which have imposed new restrictions in recent days, are likely to slow economic activity.
The market also looks to OPEC member countries and their OPEC + allies,
following the failure of the meeting, which was to lead to an increase in the economy.
Experts now warn that “everyone can increase their production whatever it may cost,”
but this will have a negative impact on market prices, which are now experiencing a good surge,
after a year and a half of decline following the Covid- 19 crisis, unprecedented closures, and a months-long suspension of aviation activities, which has hurt the market.
On the other hand, an EIA report released last Thursday showed that oil production has increased in the United States, with some areas now at full capacity.
The leaders of the Producers’ Alliance, Saudi Arabia, and Russia, have offered,
as we should remember, to increase production slightly to meet the growing demand,
with the resumption of the world economy after the Covid- 19 pandemic.
The United Arab Emirates asked to increase its base production level, to be able to produce more,
and 23 OPEC+ countries canceled their meeting earlier this week.
In addition, “concerns about the Delta variant, which could trigger a new wave around the world,
have caused massive sales of dangerous assets this week,” affecting the price of oil.
Oil records first weekly decline since May