On June 29, oil reversed previous losses to surge after OPEC+ expressed optimism that the market appears significantly improved. Also, a major importer, India called in the group to ease the cuts and then stop the price rally that threatens demand recovery from price-sensitive buyers.
At some point in the morning on Tuesday, WTI Crude prices shot up by 0.77% to trade and $73.47, and Brent Crude was up 0.70% trading at $75.17. the market reacted to the bullish outlook from OPEC+, which started its meeting earlier in the week with a review of the oil market and future growth projections.
During the meeting of the Joint Technical Committee (JTC) on June 29, OPEC Secretary-General Mohammad Barkindo said:
“The overall brighter picture in relation to the pandemic recovery efforts has led to significantly improved oil market conditions and prospects for future growth.”
On June 28 during the Asian session on June 29, the oil prices were down as the health experts warned about the rapidly spreading Delta variant of COVID, which has already impacted several countries in Europe. The popular holiday destinations for the UK tourists have imposed quarantines for the non-vaccinated Britons.
OPEC+ noise and the possible economic and fuel demand effects of a spreading Delta variant might be the key factors in oil price trends earlier in the week. The OPEC+ alliance is expected to decide on July 1 how to go on with its cumulative production cuts. The group has been gradually easing the cuts in recent months, still keeps up to 5.7 million barrels per day off the market.
Analysts majorly expect the group to decide on Thursday to further ease these cuts by August 1, with most experts gravitating toward a 500,000-bpd addition for most of August. But the third-biggest oil importer, India, called on OPEC+ to rein in the oil price, which at $75 per barrel is ‘quite challenging’ for the price-sensitive buyers and threatens their oil demand recovery.
India’s Oil Minister Dharmendra Pradhan said at a BNEF Summit:
“Today’s price is a very challenging one. I am persuading my producer friends. OPEC meeting is supposed to be there in the next few days, and I hope the price will be a little bit sober, that is our expectation.”