Oil Price Outlook Hinges on OPEC Meeting as US Output Remains Stagnant

Oil Talking Points

The price of oil is expected to face increasing sensitivity over a entrance days as a Organization of a Petroleum Exporting Countries (OPEC) and a allies assemble for the Joint Ministerial Monitoring Committee (JMMC) assembly on Aug 17-18.

Fundamental Forecast for Oil: Neutral

The cost of oil cleared a Jul high ($42.51) during a initial week of Aug even yet OPEC prepares to retreat a prolongation cuts in response to COVID-19, and it stays to seen if a organisation will change gears over a entrance months as a press recover from a prior JMMC assembly reiterates that “the outcomes of a Jun Meetings extended a initial proviso of a prolongation adjustments until 31 Jul 2020.”

It seems as yet OPEC and a allies will tell a intentional measures from progressing this year as a organisation insists that “the additional supply ensuing from a scheduled easing of a prolongation composition will be consumed as direct recovers,” and a organisation might revive wanton out to pre-pandemic levels as a refurbish to a Monthly Oil Market Report (MOMR) reveals an softened opinion for oil consumption.

Oil Prices OPEC

“Global oil direct expansion in 2020 is revised adult by 0.1 mb/d from a prior month’s assessment” according to a Jul MOMR, with a news going onto contend that “the ceiling rider reflects somewhat betterthan-expected oil direct from a OECD segment in2Q20, that some-more than equivalent downward adjustments to non-OECD oil direct during a same quarter.”

In turn, a death of a Jun agreement might drag on oil prices, though another turn of intentional prolongation cuts from OPEC and a allies might keep oil prices afloat as US wanton outlay sits during a lowest turn given 2018.

EIA Crude Oil Forecast

Recent total from a US Energy Information Administration (EIA) showed wanton prolongation squeezing to 11,000K b/d in a week finale Jul 31 after holding during 11,100K b/d for dual consecutive weeks, and a serve slack in US outlay might assistance to keep a cost of oil afloat as OPEC Secretary General Mohammed Barkindo pledges to yield “reassurance to a marketplace that a OPEC+ organisation is active and entirely mindful of a ever-evolving oil marketplace fundamentals.

With that said, developments entrance out of a JMMC assembly might change a cost of oil as OPEC and a allies ready to revive wanton outlay to pre-pandemic levels, though another turn of intentional prolongation cuts might keep appetite prices afloat as US outlay stays stagnant.

— Written by David Song, Currency Strategist

Follow me on Twitter during @DavidJSong