Experts Project Positive Outlook for Crude Oil

By Adedapo Adesanya

There are expectations for a stable rise in the prices of crude oil this week as traders appear to give the Organisation of the Petroleum Exporting Countries (OPEC) the benefit of the doubt that all of its members will follow through with their pledges to cut production.

This bankable decision followed major producers meeting for the Joint Ministerial Monitoring Committee (JMMC) of OPEC+, saying it was making moves to ensure that certain countries make up for failing to fully meet their reduction targets last month.

Last week saw the US West Texas Intermediate and the Brent crude oil futures hitting $40 and $42 per barrel respectively.

This is likely to extend further this week especially as laggards like Iraq and Kazakhstan, during the meeting, pledged to comply better with oil cuts. And others including Nigeria, Gabon, Angola, and Azerbaijan to follow. This spells that the amount to crude to be taken off could deepen in July.

After July, supply will be reduced to 7.7 million barrels per day until December as the JMMC did not discuss extending the output ceiling.

The JMMC will meet again on July 15, when it would recommend the next level of cuts to the alliance. But there is likely not going to be an extension.

OPEC+ is on the right track to re-balance the global oil market, but still has a long way to go, Prince Abdulaziz bin Salman said at the group’s meeting. He stated that the next two weeks will be critical for the cartel to demonstrate all countries are adhering to the cuts.

However, the persistent resurgence of Coronavirus in China, the world’s biggest crude importer, is clouding the long-term outlook as the country battles a fresh outbreak.

Spikes in coronavirus infections in parts of the world such as Beijing and Australia’s second-most populous state, Victoria, have prompted authorities to reimpose movement restrictions to curb the spread.