Affected by the expected increase in production at the OPEC meeting, international crude oil continued to decline last week.
At one point, the decline in WTI crude oil widened to 2 per cent, breaking its lowest level since April 9, losing the $64 mark, while cloth oil fell more than 1 per cent.
On Friday and Saturday, OPEC and non-OPEC oil producers will meet in Vienna, and Saudi Arabia and Russia are trying to push countries to increase production. According to the previous news revealed by the media, the increase in production is between 50 and 1.5 million barrels per day.
Last week, WTI crude oil fell about 1 per cent and cloth oil fell about 4 per cent.
At present, there are many factors affecting oil prices, and it is expected that OPEC's decision to increase production in a few days' time will be the most important driving factor in the near future. In addition, Fed interest rate hikes and a stronger dollar will also be other variables affecting oil prices.
Hossein Kazempour Ardebili, Iran's representative to the European Union, said in an interview on June 17th that the three founding countries of OPEC would block the agreement to increase production. If Saudi Arabia and Russia want to increase production, this needs to be agreed by all parties. If the two countries want to act alone, it is a violation of the cooperation agreement.
On Thursday, Russian Energy Minister Alexander Novak said OPEC and its allies might consider increasing production by up to 1.5 million barrels a day. That would be enough to offset the IEA's estimated supply losses in Venezuela and Iran. Saudi Arabia has been discussing different bills to increase crude oil production by 500000 to 1 million barrels a day, according to people familiar with the matter.
Just a few days ago, the Federal Reserve announced that it would raise interest rates again, and the dollar soared to its highest level in nearly a year. The Fed has raised interest rates twice this year and plans to raise them twice more this year.
The Fed's move to raise interest rates reverberated in the oil market. Higher oil prices will be a drag on demand, and a stronger dollar will magnify the cost of the local currency.
The IEA said last week that global oil demand would increase by 1.4 million barrels a day in 2018 and 2019, although that forecast was vulnerable to several potential factors. "of course, there are downside risks to oil demand, including the possibility of higher oil prices, weaker economic confidence and a further strengthening of the dollar," the agency wrote in the report. "
Analysts also give different views on the future trend of oil prices.
Due to multiple factors affecting the trend of oil prices, analysts' oil price forecasts are divided into two camps: bearish and bullish.
Analysts who are bearish on oil prices believe that the expected increase in OPEC production, the increase in US shale oil supply, the drag on demand caused by high oil prices, the Fed's rate hike will put pressure on oil prices, and oil prices may be under pressure in the future.
Analysts who are bullish on oil prices believe that the decline in global oil inventories to the five-year average, reduced oil production in Venezuela, Iran and Libya, and increased OPEC production will not offset the production cuts in these countries, which will boost oil prices in the future.