Oil dips by $4 in 2 days as output cut standoff lingers
Oil started the day bearish, falling for a third consecutive session. Investors continue to speculate on the ongoing production dispute between Saudi Arabia and the United Arab Emirates (UAE) impacting global fuel supply.
It was earlier reported that the Organization of the Petroleum Exporting Countries and allies (OPEC+) is yet to decide on August supply. The cause of the impasse is a dispute among members over whether or not the group should extend output cuts.
This impasse has caused the Brent oil futures to decline by over $4.00, from trading $77.80 just two days ago to trade currently at $73.16 at the start of the London session.
The Brent oil futures is down 0.36 per cent for the day. The U.S oil followed in the same manner, falling by over $5.00 in 2 days, from trading $76.96 to trade $71.84. The U.S oil is down 0.47 per cent for the day.
Oil prices have surged nearly 50 per cent so far in 2021 as a result of consumption rebounding due to positive vaccination efforts from major oil consumers and the OPEC+ easing in the supply of fuel output.
However, investors are concerned about the OPEC+ reaching a deal on output cuts and the outbreak of the COVID-19 delta variant in nations. These two issues have a significant impact on fuel demand recovery.
JPMorgan Chase said in a note that it expects that OPEC+ will eventually agree on a deal in the following weeks to increase output by 400,000 barrels a day each month for the rest of 2021.
Oanda Corp senior market analyst, Edward Moya stated on Bloomberg that, “People are just wildly uncertain about how the OPEC+ stalemate will impact the future output. August is in question and the demand warrants more production.”