Oil down as OPEC+ keeps silent on production policy from August

ANKARA

Oil prices dipped on Friday on ambiguous signs from the OPEC+ group because of the lack of resolution on the cartel’s output policy from August due to stalled talks in early July and with no date set for a follow-up meeting.

International benchmark Brent crude was trading at $73.41 per barrel at 0747 GMT for a 0.08% loss after closing Thursday at $73.47 a barrel.

American benchmark West Texas Intermediate (WTI) was trading at $71.59 a barrel at the same time with a 0.08% decrease after ending the previous session at $71.65 per barrel.

The fall in prices was mainly driven by supply confusion from the cancellation of the OPEC+ monthly meeting over the United Arab Emirates' (UAE) reaction to raising production without updating the output baseline, leaving the group without a policy decision on output from August onwards.

However, on Wednesday, the UAE energy ministry said a deal with OPEC+ on its baseline is yet to be reached, and “deliberations and consultations between concerned parties are ongoing.”

The group had previously agreed to gradually return 2.1 barrels per day (bpd) of supply to the market during May through July, after which the curbs still in place would stand at 5.8 million bpd.

Until a new agreement is reached, it is expected that the current OPEC+ cut of 5.8 million bpd will be maintained.

Concerns over the Delta coronavirus variant and its possible economic impacts also continue to weigh on prices.

Vaccines doses against coronavirus administered across the world have now reached over 3.5 billion.

The global number of cases climbed to 189.9 million, with over 4 million deaths and 172 million survivors, a tally from Johns Hopkins University showed.

The number of people who lost their lives from the virus in the US totaled 608,399 as of Friday.

While Brazil ranks second with 538,942 deaths, India is placed third with 412,531.

However, positive projections of both the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC) for oil demand in 2022 limited further declines.

In its monthly oil market report, OPEC forecast a 3.4% year-over-year growth in demand next year in line with a 4.1% economic growth following a strong rebound in 2021.

The IEA also forecast that global oil demand would increase by 3.1% next year on the back of more economic activity and expectations that the expansion of vaccination campaigns will prevent a resurgence of Covid-19 cases.