Oil shrinks yesterday's gains
Oil markets have witnessed some volatility recently, as prices fell during Asian trading on Thursday, influenced by investors fears that the OPEC alliance may increase production in the coming months, which may curtail the gains made last week.
Rise and then decline
Oil consolidated its gains on Wednesday with a rise of more than 3%, supported by geopolitical tensions after Iran stopped cooperating with the International Atomic Energy Agency, adding a risk premium to prices although actual supplies were not affected.
However, these gains began to shrink as expectations mounted that the OPEC alliance would decide during its meeting scheduled for Sunday to increase production by 411 thousand barrels per day starting in August.
The impact of OPEC decisions on prices
Recent volatility indicates the sensitivity of the market to any supply-related developments, especially given the unevenly recovering global demand.
On the one hand, the alliance seeks to support prices by maintaining a policy of reducing production, and on the other hand, it may have to gradually increase supply to meet recovering demand, which raises investors fears of falling prices.
Price movement in the market
These expectations were reflected in futures prices, as WTI contracts fell to 67.31 dollars per barrel, while Brent crude fell by 0.2% to 68.96 dollars per barrel. Recent moves indicate that the market is trying to return to balanced levels after the wave of ascent witnessed this week.
Future forecasts
The future of oil prices remains linked to several factors, most notably:
- OPEC decisions and whether to increase production or maintain the current policy.
- The pace of global economic recovery and the impact of new waves of coronavirus.
- Geopolitical developments, especially with regard to the Iranian nuclear negotiations, which may affect Iranian oil exports if sanctions are lifted.
On the technical side, we expect that oil prices will continue to rise, and any corrective decline will be an opportunity to reposition buying again as long as it maintains the important demand levels that we mentioned in the weekly analysis video here
Weekly energy analysis
