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Oil Price Fundamental Daily Forecast – It’s Strong Demand Expectations Versus Easing of OPEC+ Output Cuts

By:
James Hyerczyk
Published: Jun 22, 2021, 15:07 UTC

OPEC+ is discussing a further easing of oil output cuts from August as oil prices rise on demand recovery.

WTI and Brent Crude Oil

In this article:

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading nearly flat shortly after the regular session opening on Tuesday. Both markets hit their highest levels since April 2019 before the buying dried up on fears that OPEC and its allies may be discussing raising oil production in August. Some traders downplayed the impact of such a move, citing strong demand expectations as the reason.

At 14:14 GMT, September WTI crude oil is trading $72.15, up $0.12 or +0.17% and September Brent crude oil is at $74.19, up $0.14 or +0.19%.

OPEC+ Discusses Further Easing of Oil cuts from August

OPEC+ is discussing a further easing of oil output cuts from August as oil prices rise on demand recovery, but no decision had been taken yet on the exact volume to bring back to the market, two OPEC+ sources told Reuters on Tuesday.

OPEC+ is returning 2.1 million barrels per day (bpd) to the market from May through July as part of a plan to gradually unwind last year’s record oil output curbs. OPEC+ meets next on July 1.

“It is highly possible to increase gradually from August,” said one of the sources, adding that no final decision had been made and the exact volumes are yet to be agreed on.

The talks mean that OPEC and Russia are likely to find common ground again on oil production policy. Moscow has been insisting on raising output further to avoid prices spiking, while key OPEC producers, such as Saudi Arabia, have given no signals on the next step until now.

Russian producers see August as a good time to further ease oil output cuts despite the expected return of Iranian barrels as the market is in deficit, an industry source told Reuters on Tuesday.

“Limping” U.S. production also supports the case for easing the curbs, the Russian source said.

Daily Forecast

Prices are relatively high as some traders bet on increasing demand to provide support, while others see the possibility of more OPEC+ supply a problem.

Later today at 20:30 GMT, the American Petroleum Institute (API) will release its latest weekly crude oil inventories figures. The report is expected to show a 3.6 million barrel draw for the week-ending June 18.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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