Oil prices remain volatile amid OPEC + conflict over production | News from banks

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Without a new deal, OPEC + is expected to keep supply stable in August, further tightening the market.

Through Bloomberg

Oil prices remained volatile in New York as traders assessed the current standoff among OPEC + countries over plans to increase production.

West Texas Intermediate futures have been truncated as a dispute between Saudi Arabia and the United Arab Emirates blocks OPEC + plans to revive interrupted supplies. The rating peaked in six years early Tuesday before dropping back down. White House press secretary Jen Psaki said U.S. officials have spoken to both sides and OPEC + delegates said consultations are continuing to seek a compromise.

“Uncertainty seems to prevail after the surprising result of the last petronations meeting and its inability to agree on the future of their supply agreement,” said Norbert Ruecker, head of economics at Julius Baer Group Ltd. in Zurich.

Refiners have reaffirmed their appetite for barrels, with at least five Asian oil processors planning to demand all of their contract volumes from Saudi Arabia, even as the kingdom hiked prices in August. Companies have been unable to find cheaper alternatives.

Oil has skyrocketed in 2021 as the rollout of coronavirus vaccines allows major economies to reopen, spurring a recovery in global consumption. The Organization of the Petroleum Exporting Countries and its allies have returned some of the production they had taken offline at the height of the pandemic, but they are struggling to agree on a way forward. Without a new deal, they are expected to keep supply stable in August, further tightening the market.

Saudi Aramco has raised the official Arab Light selling price by 80 cents per barrel to $ 2.70 above the regional benchmark for Asia. It’s the biggest monthly gain since January, and it suggests the oil giant won’t increase supply next month.

Prices:

WTI for August delivery traded up 0.6% to $ 73.81 a barrel on the New York Mercantile Exchange at 1:42 p.m. London time. It fell 2.4% on Tuesday as a stronger dollar led to a massive sell-off of commodities.

Brent for the September settlement also rose 0.6% to trade at $ 74.97 a barrel on the ICE Futures Europe exchange.

  • Prices fell 3.4% on Tuesday.
  • Brent’s quick time spread was 95 cents per barrel offsetting, an uptrend

JPMorgan Chase & Co. is among the banks that expect a deal will be reached. OPEC + should finally agree in the coming weeks to increase production by 400,000 barrels per day each month for the remainder of 2021, she said in a note.

At the same time, the widening fault lines between the two Gulf allies may cause cartel members to pump more unilaterally, risking a general melee that could push prices down. There is the potential for a price war, but everyone involved will try to avoid it, according to ING Group NV.



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