Wednesday, March 22, 2023

Oil Prices in 6-Week Rally as OPEC+ Dillydally Stokes Hope for Cautious Hike By


© Reuters.

By Yasin Ebrahim – Crude oil prices notched a sixth-weekly win Friday despite a sluggish end to the week as OPEC+ struggled to reach consensus on plans to ease production curbs.

On the New York Mercantile Exchange rose 7 cents to $75.16 a barrel, while on London’s Intercontinental Exchange (NYSE:), added 0.70% to $76.37 a barrel.

The Organization of the Petroleum Exporting Countries and allies, or OPEC+, got their meeting underway Friday, to reach a breakthrough on how much to lift output. But the meeting ended without a deal after the United Arab Emirates failed to go ahead with a preliminary agreement – to reportedly raise output by 400,000 barrels per day from August to December – struck by Saudi Arabia and Germany. The meeting will reconvene on Monday.

OPEC+ was forced to delay its meeting until Friday after the United Arab Emirates blocked a plan a preliminary agreement to reportedly raise output by 400,000 barrels per day from August to December.

The squabble of how much to raise output has increased expectations for the cautious production hike.

“The OPEC+ meeting delay provides some insight on the continued fragility of oil market fundamentals. This could result in OPEC+ cautiously increasing supply, which is a positive for oil markets while demand rebounds toward pre-pandemic levels,” RBC said in a note.

On the demand side, meanwhile, the optimism over a recovery shows little sign of fading despite the threat posed by the delta variant of Covid-19 on international travel.

Earlier this week, OPEC Secretary General Mohammad Barkindo, forecast demand to rise by 6 million barrels per day in 2021, the bulk of which, about 5 million barrels per day, is expected in the second half of the year.

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