At the auction on Thursday, the prices of black gold reported another decline amid news about an increase in reserves of petroleum products in the United States. Another downward factor for the market was the information about the readiness of Saudi Arabia and the United Arab Emirates to agree on production quotas.
Thus, August futures for WTI crude oil sank by 1.2% to $72.24 per barrel, and September contracts for Brent crude oil – by 1.1% to $73.94 per barrel. Experts of the commodity markets noted that such a spectacular fall in the value of black gold is observed for the first time since March of this year.
The decline in oil prices is also inextricably linked to a global problem – investors' concern about the situation with the spread of a new strain of COVID-19, which may provoke the introduction of new lockdowns, blockages, and travel bans in Asian and European countries. The implementation of such restrictive measures will undoubtedly weaken the global demand for black gold.
In addition, the number of people infected with coronavirus is also growing in America, which may lead to a weakening of demand for oil in states with low vaccination rates.
In early July, the meeting of the OPEC+ oil producing cartel ended without agreements due to the uncompromising position of the UAE, which requires an increase in the base production level next year from 3.17 to 3.65 million barrels per day. The third round of negotiations scheduled for last week also did not take place, and the current production quotas were maintained. The next date of the alliance meeting has not yet been announced, which causes considerable concern among participants in the commodity markets.
Last Wednesday, the media reported that Saudi Arabia and the United Arab Emirates came to a compromise. At the same time, representatives of the UAE said that the deal has not yet been reached, since the support of other states of the oil-producing coalition is necessary for the end of the negotiations. Another threat of an early agreement came from Iraq, which began to demand an increase in the base level of production as part of the alliance's deal.
Oil market participants continue to monitor whether OPEC+ will approve the proposed agreement and on what terms. Recall that in order for the oil-producing cartel to make an official decision, the consent of all members-the states of the alliance is necessary.
Earlier, OPEC published a monthly report with a forecast of an increase in global demand for black gold this year by 6 million barrels per day (b/d) – up to 96.6 million barrels per day. By the way, compared to June, the preliminary scenario remained unchanged.
In addition to demand forecasts for 2021, the OPEC report also indicates expectations for global economic growth in the coming year. Thus, the international organization assumes that the active fight against COVID-19 worldwide in 2022 will allow the demand for black gold to return to the pre-pandemic level. Translating into the language of numbers, next year OPEC predicts an increase in global demand by 3.3 million barrels per day - up to 99.86 million b/d.
As for the future scenarios proposed outside the coalition in 2021, OPEC lowered them by 30,000 barrels per day, ignoring data on an increase in the production forecast in Canada and the United States. This year, the international organization expects an increase in supply outside the cartel by 81,000 b/d – up to 63.8 million b/d.
