Oil Prices fell 5% early Monday, with WTI Crude falling to $67 a barrel after OPEC+ announced on Sunday that it would begin restoring 400,000 barrels per day (BPD) to the market every month starting in August until the 5.8 million BPD cuts are fully unwinded. The likelihood of monthly oil supply increases from the OPEC+ alliance comes as COVID infections in numerous nations rise because of the faster-spreading Delta form.
Concerns over possible hitches in global oil demand recovery, along with growing production from OPEC and its Russia-led non-OPEC partners, pulled Oil Prices lower on Monday. WTI Crude prices were down 3.9 percent at $69.01 as of 8:22 a.m. EDT, while Brent Crude prices were down 3.52 percent at $71.00. However, the fact that OPEC+ reached an agreement on output and baseline levels eliminated much uncertainty from the market, which was worried about the alliance breaking up.
According to Helima Croft, head of global commodity strategy at RBC Capital Markets, this arrangement should offer market players comfort that the group is not headed for a nasty separation. It will not be opening up the production floodgates anytime soon, positive for the market.
Even though OPEC+ will be increasing supply in the following months, many analysts anticipate the market will stay tight due to rising demand. Therefore, because the supply additions from OPEC+ are in line with the bank’s earlier predictions, ING reaffirmed its Brent Crude price forecast of $75 per barrel for the third quarter of this year. Likewise, Goldman Sachs remains bullish on oil, estimating that the OPEC+ accord will add $2 per barrel to its $80 per barrel Brent forecast for this summer.