- Oil prices are hovering around $80.00, with hopes for further recovery on OPEC+intervention.
- The oil cartel will continue to cut oil production by two million bpd till the end of 2023.
- Sky-rocketing Covid-19 cases in China could force the administration to return to lockdown curbs.
West Texas Intermediate (WTI), futures on NYMEX, have witnessed a perpendicular recovery to near the psychological resistance of $80.00 after refreshing an 11-months low at $75.27. The black gold is hovering around the $80.00 hurdle as commentary from Saudi Energy Minister Abdulaziz bin Salman Al-Saud has renewed supply worries.
Chatters over intervention by the OPEC+ in the oil market to support oil prices from its imbalanced movements got confirmed after Saudi Energy Minister said that the current OPEC+ deal will continue till the end of 2023. Earlier, the oil exporting countries agreed to cut production of oil by two million barrels each day to boost oil prices. The move is likely to disturb the current demand-supply mechanism, therefore, the oil prices are shaping themselves to turn efficient.
On the demand front, an acceleration in Covid-19 infections in China has raised concerns over the oil demand ahead. The current movement in rising Covid-19 cases could force the Chinese administration to return to Covid-19 restrictions as it is the only measure to curtail the spread. Due to the rising infections in China, investment banking firm Goldman Sachs has slashed its forecast for Brent crude oil prices in the fourth quarter to US$100 per barrel from its prior US$110 estimate.
Meanwhile, demand for US Durable Goods will also disclose the oil demand in the US economy ahead. As per the projections, the US Durable Goods Orders will land at 0.4%, similar to their prior release. Further improvement in demand for durable goods would eventually signal oil demand projections.