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Oil Up, OPEC+ Delays Meeting on Production Policy

Commodities30 minutes ago (Jun 29, 2021 10:41PM ET)

(C) Reuters.

By Doris Yu – Oil was up Wednesday morning in Asia after the Organization of the Petroleum Exporting Countries and allies (OPEC+) delayed its meeting this week on production policy.

Brent Oil Futures rose 0.61% to $74.73 by 10:39 PM ET (2:39 AM GMT) and Crude Oil WTI Futures jumped 0.69% to $73.48.

U.S. crude oil supply data from the American Petroleum Institute showed a draw of 8.153 million for the week ending June 25. Forecasts prepared by predicted a 4.460 million-barrel draw, while a 7.199 million-barrel draw was recorded during the previous week.

Crude oil supply data from the U.S. Energy Information Administration is due later in the day.

“We’ll see the trading continue to be choppy until Thursday when the actual meeting is held and we get the official decision,” Rebecca Babin, senior energy trader at CIBC Private Wealth Management, told Bloomberg.

Oil prices have surged about 50% in 2021 as fuel demand rebounded in key markets such as the U.S. and China thanks to their ongoing economic recovery from COVID-19. However, the recent spread of the COVID-19 delta variant weighed on the demand recovery.

“The delta variant will continue to be in the background and potentially keep the commodity from exploding higher,” said Babin.

On the supply front, some OPEC+ members including Russia suggested increasing the oil supply while Saudi Arabia was concerned about the global spread of the COVID-19 delta variant despite the growing demand. The cartel delayed its preliminary talks to Friday to give more time to resolve differences.

OPEC Secretary-General Mohammad Barkindo was optimistic about the market at the OPEC+ alliance meeting on Tuesday, but cautioned that it “not completely out of the woods yet.” The group is expected to revive some of the supplies it halted when demand decreased during COVID-19, with investors expecting an increase of 550,000 barrels a day.

Even OPEC+ boosted the supply larger than expected, it will not reach inventories in time to alleviate the tight market, Goldman Sachs Group Inc (NYSE:GS) analysts including Damien Courvalin and Jeff Currie said in a report.

“Ultimately, much more OPEC+ supply will be needed to balance the oil market by 2022,” they added.

Oil Up, OPEC+ Delays Meeting on Production Policy

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