Oil Volatile After UAE Resolves OPEC+ Standoff
Oil algos are unsure what to make of the latest headlines for now as Bloomberg reports that UAE has resolved its standoff with OPEC and agreed on a new higher baseline production level of 3.65m b/d (versus the UAE’s prior 3.16m b/d output level).
Additionally, the OPEC+ deal is to be extended until the end of 2022 (vs the original April 2022), according to a source.
WTI tested up to to $75 and tumbled down to $74 on the headline, then rebounded rapidly back up to test $75 again…
Some context for that price level relative to pre- and post-OPEC_ meeting…
At first glance this is a positive for oil, since it removes the uncertainty of a cartel collapse, but – as price is showing us – the increased supply is a net negative (and signals to other players that they can hold the Saudis to ransom over a big deal and increase their own outputs).
Bloomberg also reports that an unnamed OPEC delegate has confirmed a new date for a meeting will be set soon.
However, oil prices will continue to be volatile, as Ed Morse, head of commodities research at Citigroup Inc., noted: “Even if OPEC decides to raise output in August, that crude will not reach refineries until after the August peak-demand period will be over.”
Wed, 07/14/2021 – 07:30
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