Increased Supply, Exports Drop: New Drama of Oil Prices Begins?
World oil prices on Wednesday (2/7) were almost unchanged as the market weighed various factors, ranging from the plan to increase supply by OPEC+, the weakening US dollar, to US economic data. Brent oil was recorded to have increased slightly by 6 cents to $68.16 per barrel, while US West Texas Intermediate (WTI) crude remained stable at $65.45 per barrel.
The increase in prices is still being held back by expectations that OPEC+—a group of major oil producers such as Saudi Arabia and Russia—will increase production next month. According to several sources, OPEC+ plans to increase production by 411,000 barrels per day starting in July, the same as the increase made in May and June. Even so, analysts believe that this increase in supply has not had much impact because most of the oil may still be used for domestic needs, not exports.
In addition, data from the American Petroleum Institute shows that US crude oil stocks actually increased by 680,000 barrels last week, even though stocks usually run low in the summer. This is confusing the market because it is inconsistent with demand trends. Despite an increase in Saudi Arabian shipments in June, OPEC+ exports overall have remained flat since March. According to UBS analyst Giovanni Staunovo, this could be due to increased domestic energy consumption during the summer.
On the currency side, the US dollar continued to weaken to a 3-1/2-year low against a basket of major currencies. This could be a breath of fresh air for oil prices as overseas buyers can get cheaper prices. Looking ahead, the market is waiting for two key data from the US: the nonfarm payrolls report on Thursday, and official oil inventory data from the Energy Information Administration (EIA) due out on Wednesday at 10:30 a.m. ET.
Source: (ayu-newsmaker)
