Oil analysts forecast a prolonged rally as OPEC oppose calls to ramp up the supply
- Non-OPEC and OPEC partners, collectively known as OPEC+, said on 4th October that it would not change its existing pact for a gradual rise in oil supply.
- The decision of the group on production policy was widely expected, though some had predicted U.S. pressure and India to tame rising oil prices might have been enough to convince the group to increase their supply.
- The market is full of confidence says a senior analyst at PVM Oil Associates, Tamas Varga on Tuesday.
LONDON, UK – Shortly after a group of the world’s most influential oil producers decided against a large supply boost, oil prices soared to multi-year highs. Crude oil prices are expected to rise to $100 a barrel, according to energy specialists. OPEC and non-OPEC partners, known as OPEC+, announced on Monday that they will continue to their existing agreement for a gradual rise in oil output.
In a statement released online shortly after the relatively quick ministerial talks, OPEC+ stated it had “reconfirmed the output adjustment plan.” This was in reference to the previously agreed-upon decision to add 400,000 barrels per day to the market in November. The group’s plan on production policy had been widely expected, while some had already expected that pressure from the US and India to lower oil prices would compel the group to increase supply.
On Tuesday morning, international benchmark Brent crude futures were trading at $81.74 a barrel, up more than 0.5 percent for the session, while U.S. West Texas Intermediate futures were trading at $77.92, up nearly 0.4 percent.
Uncertainties and Predictions of the Experts:
Brent futures rose 2.5 percent to $81.26 on Monday, marking their highest closing in three years. WTI climbed 2.3 percent to $77.62 in the previous session, its best close in nearly seven years. Both oil contracts have increased by roughly 60% since the beginning of the year. Tamas Varga, senior analyst at PVM Oil Associates, wrote in a research note on Tuesday that the market is “full of confidence.” “The question is whether or not this optimism is warranted.”
In July, OPEC+ agreed to increase output by 400,000 barrels per month until at least April 2022 in order to phase out existing output cuts of 5.8 million barrels per day. Global oil demand has recovered faster than many predicted following the coronavirus epidemic, while global supply has been hampered by storm disruptions and low investment.