Oil Traders Wary of OPEC+ Change in NarrativeOil prices drifted lower at the first trading session of the week amid a quiet trading session in play, as major markets in Asia and many parts of the Western Hemisphere remain closed for the Qingming Festival and Easter holiday.
At the time of drafting this report, the British based oil contract, Brent crude was trading at about $63 a barrel, down by over 2% with the strong dollar keeping investors at bay while West Texas Intermediate futures was also down by over 2% to trade at about $60 a barrel.
Oil bulls are under immense pressure over fears on further disruption in crude oil’s supply dynamics after the latest outcome of OPEC+ meeting, revealed gradual easing of its production curbs between May and July.
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Traders are currently weighing the effect of OPEC+ change in the narrative, increasing crude oil output by about 350,000 barrels per day in the month of May, June and by 400,000 barrels per day in July.
Propelling the fear of oil traders are report pointing to increased Iranian oil production heading to the world’s highest importer of oil (China) probably means the futuristic dynamics of oil demand/supply rebalancing faces more headwinds in the midterm.
Though credit should be given to OPEC’s previous efforts in supporting oil prices from historic lows sighted last year as their oil production curbs and compliance aided the black viscous hydrocarbon price, however the resurgence of the COVID-19 pandemic in key international markets has built a dark cloud on-demand recovery that was expected to gather momentum in the second half of this year.
So, it is fair to say traders will weigh on the strong positivity seen lately in the world’s biggest economy and Europe lockdown mode (weighing deep on energy demand) thus hinting the coming days might be likely volatile at the world’s most liquid commodity market.