Oil prices soar up slightly on July 6 after the rally on July 5 that was supported by the hopes of a tight market as OPEC+ nation output talks were abandoned. But there are concerns that the members may begin to raise the production capped gains. Brent Crude increased up to 0.1 % or 7 cents at $77.23 a barrel after gaining 1.3% on July 5.
The US West Texas Intermediate or WTI crude futures were at $76.38 per barrel. It was 1.65 percent or $1.22 up from the July 2’s close. The Organization of the Petroleum Exporting Countries and its allies called OPEC+ and abandoned the oil output talks. The ministers of the OPEC+ also did not set a new date to resume the talks after the clash. The clashing began as the United Arab Emirates rejected the eight-month extension proposal to output curbs, and it meant that there is no deal agreed to boost production.
An analyst at commodities broker Fujitomi, Toshitaka Tazawa, said that the hopes of OPEC+ not adding more supply from August lent support to the market, but the investors are not interested in moving in any direction due to uncertainty over the OPEC+ members’ actual actions. Oil Minister of Iraq Ihsan Abdul Jabbar said on July 5 that Iraq is committed to the current agreement that it has done with OPEC+.
He also said that the country does not want to see oil prices rising above the present levels to achieve stability. The minister also said he expects that in 10 days, there will be the announcement of the new date for the next meeting.
OPEC and its Allies Agreed on 2020 Record Output Cuts
OPEC+ members have agreed on 2020 record output cuts to cope with the induced price crash due to Covid-19. The producers are gradually easing the output restrictions. However, a plan on July 2 to lift the output by around 2 million barrels per day from August 2021 to December 2021 was blocked by the UAE. It also blocked the extension of the pact on gradual output shifts to the end of 2022.
The vice president of Wood Mackenzie, Alan Gelder, said that the sticking point emphasizes UAE production levels under normal circumstances. It is an issue that OPEC should resolve prior to the current agreement termination in April 2022.