U.S. oil rebounded to $75, and the market was nervous before the evening OPEC+ meeting

匯通網 ·  07/02/2021 19:21

Original title: US oil rebounds at $75, and the market is nervous before the evening OPEC+ meeting

U.S. crude oil futures fell slightly back to $75 during the European market on Friday (July 2) after ministers of the Organization of Petroleum Exporting Countries and its allies postponed a meeting on production policy because the UAE rejected plans to increase crude oil by 2 million barrels per day in the second half of this year.

As of press release, U.S. crude oil futures were reported at $75.16 per barrel, down 0.09%.

Brent crude oil

The futures price was reported at $75.74 per barrel, a decrease of 0.13%.

Sources said that the UAE did not agree with the proposal to increase production, and the country said it would nod and release only if OPEC+ supports raising its baseline to cut production. Therefore, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting made no recommendations, and further negotiations may be needed on the OPEC+ decision to increase production. The OPEC+ meeting has been postponed until Friday to complete consultations and discussions. According to some sources, the OPEC+ JMMC on Friday will be held at 21:00 p.m. Beijing time, and the OPEC+ meeting will be held at 22:30 p.m. Beijing time.

Both US and British oil rose sharply on Thursday (July 1), as Saudi Arabia's and Russian-backed OPEC+ plans to increase 400,000 b/d per month from August to December 2021 were more cautious than investors' expectations. Oil prices fell after the plan was boycotted by the UAE and OPEC+ postponed the ministerial meeting until Friday.

The OPEC+ meeting was postponed for one day, leaving oil investors and central bank governors nervous and uneasy ahead of the meeting later on Friday. Previously, OPEC+ seemed to have reached a principle agreement on increasing production by 400,000 b/d per month from August to December, and the monthly increase was not far different from market expectations. Although this is not enough to keep up with the rapid rebound in demand, oil prices are likely to continue to rise in an orderly manner over the next few months.

The worst case scenario is that no agreement can be reached, which will trigger a surge in prices and cause trouble for central banks around the world. But considering all the efforts OPEC+ has made to control the market since last year's price war, this seems unlikely to happen. Despite the concessions made to the UAE, if an agreement similar to the original agreement can be reached, this will prevent oil prices from soaring too high.

Dutch InternationalThe group's commodity strategist said in a report that if an agreement cannot be reached, it may mean that the group will continue to maintain the current level of production, which means that the market will tighten faster. If existing restrictions are extended, some OPEC+ oil producers may be unwilling to stick to quotas, which will lead to an increase in supply.

U.S. crude oil futures prices are expected to rise 1.5% this week. Due to the tightening of the US crude oil market, refineries have started construction to meet the revived demand for gasoline, while US shale oil production has not increased at the same rate.

Brent crude oil

Prices are expected to drop 0.5% this week, reflecting concerns about fuel demand in parts of Asia, where cases of the highly infectious novel coronavirus are surging.

Citibank analysts say U.S. crude oil prices are not expected to rise to

Brent crude oil

Above, because US oil production will pick up at the end of 2021 and grow further in 2022.

Furthermore, the US non-farm payrolls report for June will be released a little later in the day. Against the backdrop of the Fed's downsizing expectations, it may trigger a huge shock in the financial markets, so be careful.

According to the latest data from the Chicago Mercantile Exchange Group (CME Group) crude oil futures market, traders increased their open positions by 22,800 on Thursday, increasing their holdings for the third day in a row, and trading volume plummeted by nearly 656,000 contracts.

The translation is provided by third-party software.

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