Financial Energy Review
by James Ikenna………….
The price of crude oil slide down by about 2 percent as OPEC+ plans relaxing its cut from 9.7 to 7.7 million barrel per day. This move to relax cut is expected to be part of the agenda as OPEC convenes a technical meeting Wednesday this week.
In anticipation for relaxing production cuts, the price of crude for instance Brent Crude lost about 0.62 percent to trade at $42.94 a barrel, at 6.05 am this morning Nigerian time, also the American benchmark for crude, WTI, lost about 0.72 percent to trade at $40.26.
Prices have recovered sharply from multi-decade lows in April after OPEC Countries and allies including Russia, a group known as OPEC+, cut output by a record 9.7 million barrels per day for three months since May.
This week OPEC meeting is expected to recommend an easing in the curb on oil production that has helped rally crude oil prices in recent months.
The decision to relax the cut is also predicated on the concern by OPEC members that non-OPEC countries are attempting to gain more market share by reason of the cut. The report came two days after IEA said that the worst effects of coronavirus on oil demand had passed but will continue to echo as the market recovers.
Global oil demand had rebounded somewhat faster than previously thought, although the spread of the coronavirus in the United States and Latin America is “casting a shadow over the outlook,” the International Energy Agency (IEA) wrote in its latest Oil Market Report.
The last few weeks have seen crude oil prices trade in a “remarkably stable” trading range, and according to the futures market, traders anticipate that the historic surplus seen in the second quarter will give way to a deficit in the second half of the year.
