Crude Oil Sharply Lower; Covid Cases, OPEC+ Agreement Weigh



© Reuters.

By Peter Nurse   

Investing.com — Crude oil prices slumped Monday, weighed by concerns over mounting Covid-19 cases as well as OPEC+ members patching up their differences and agreeing to additional global supply.

By 9:35 AM ET (1335 GMT), futures traded 3.7% lower at $68.94 a barrel, falling below $70 for the first time in over a month, while the contract fell 3.3% to $71.13.

U.S. Gasoline RBOB Futures were down 2.9% at $2.1872 a gallon.

Covid-19 cases are soaring in Asia, with infections hitting an 11-month high over the weekend in Singapore, Thailand had its highest single-day increase since the pandemic began, while Australia’s major cities are now on lockdown.

However, infections are also growing in the high energy-consuming regions in Europe and America, even with England removing all restrictions Monday. U.S. cases were up 70% last week over the previous week, with outbreaks occurring mainly in parts of the country with low vaccination rates.

Also weighing on the market was the news over the weekend that Saudi Arabia and the United Arab Emirates had settled their differences over output policy, allowing the Organization of the Petroleum Exporting Countries and its allies to come to an agreement to add extra supply to the global market.

Under the proposal, the group, known as OPEC+,  will increase oil supply by around 400,000 barrels a day per month starting in August until all of the output that it cut in response to a collapse in global demand at the start of the pandemic is restored.

See also  UPDATE 2-U.S. warns India against retaliatory duties over scrapping of trade privileges

However, despite today’s oil price losses, the supply increase of 400,000 barrels a day will turn out to be a pittance, according to Ed Morse, global head of commodities research at Citi, adding that demand is significantly higher, despite the Covid-19 pandemic exploding in parts of the world, and oil prices are likely to climb much further by the time summer is over.

Goldman Sachs (NYSE:) agrees, expecting modest “upside” to its summer forecast for Brent to reach $80 a barrel following the deal, while ING keeps its Brent forecast at $75 a barrel over the third quarter of 2021.

“Healthy demand growth combined with moderate supply increases from OPEC+ will likely remain supportive for the oil market in the short term at least,” ING added.

Traders also seem to expect further price gains judging from the latest , as speculators increased their net long position in ICE (NYSE:) Brent by 9,022 lots over the last week and in Nymex WTI by 7,621 lots.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

See also  Govt plans to impose 20% customs duty on solar power equipment to cut imports: Anurag Thakur





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here