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Oil prices are falling in the US, OPEC+ will increase raw material production
Author:Mariusz Dasiewicz
Oil on the U.S. fuel market is going down. Investors shall examine the provisions of the OPEC+ agreement on increased oil production concluded on Sunday. A similar downward movement recorded the price of copper.
West Texas Intermediate oil supply for August at the NYMEX fuel exchange in New York City costs US$69.44, below 2.88%.
Oil Brent in deliveries for September at the ICE Futures Europe fuel exchange in London is valued at USD 71.57 per barrel, below 2.73%.
The Organisation of Petroleum Exporting Countries (OPEC) and its non-OPEC allies reached an agreement on Sunday to increase their extraction by 400,000 barrels a day from August.
At the Sunday meeting of the Ministers of the Member States of the Organisation of Petroleum Exporting Countries (OPEC) and the cooperating countries (OPEC plus), it was also decided to increase the mining limits set for Iraq, Kuwait, Russia, Saudi Arabia and the United Arab Emirates.
The initial amount of oil production in the United Arab Emirates will be increased from 3.16 million b/d to 3.5 million b/d, although this will be less than 3.8 million, initially requested. The initial amount of production of Saudi Arabia will be increased from 11 million to 11.5 million b/d. Higher base levels for future production cuts will apply from May 2022.
"Consensus building is art. The OPEC Alliance continues," said Saudi Energy Minister Prince Abdulaziz bin Salman after reaching an agreement.
"We appreciate the constructive dialogue we had with its height and OPEC. I confirm that the UAE are involved in this group and will always cooperate within this group to make every effort to achieve a market balance and to help everyone. The UAE will remain an engaged member of the OPEC Alliance," said UAE Energy Minister Suhail Al Mazroui.
The International Energy Agency estimates the oil shortage to be 1.5 million b/d in the second half of this year, pointing to a tight market despite a gradual increase in supply.
Analysts expect the price of raw material to fall in the markets in the near future.
"The agreement reached over the weekend is likely to lead to a further fall in prices in the short term as investors loosen positions in the face of higher supply prospects," said Daniel Hynes, Senior Resource Strategy at Australia & New Zealand Banking Group Ltd.
"Sunday's decision to increase supply should reduce the pressure to increase raw material prices and reduce the recently rising fuel prices at petrol stations", ING's report.
At the beginning of July, the Organisation of Petroleum Exporting Countries and its partners (OPEC+) were unable to reach an agreement on increasing raw material production for August and the following months, and after the cancellation of the next round of negotiations, talks on increasing production were in deep stalemate.
OPEC+ agreed in spring 2020 that in the face of the pandemic-induced oil price collapse, it would reduce oil production by 10 million b/d in total. The alliance gradually limited the cuts to about 5.8 million barrels a day.
At the end of the Friday session on LME, copper dropped by 0.97% to $9.427 per tonne.
Source: PAP
