By Olu Anisere
OIL has headed 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.
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.
https://dmarketforces.com/oil-heads-into-bearish-sequence-as-opec-resolves-impasse/
