The crude oil price is on the rise again and the
markets hope that there will not be an over-supply in the event of OPEC+
deciding to increase the production in August – and in unison.
The request made by the Russian oil minister for pushing
back the meeting on the grounds of ‘presidential commitments’ caused a
minor stir among the analysts yesterday, in the absence of clear message from
the meeting, of course.
The American Petroleum Institute, API, meanwhile,
made a forecast of yet another significant crude draw; if confirmed by the same
data from the EIA, US Energy Information Administration, it is going to be the
sixth successive draw of the US crude stocks in recent weeks.
The reaction by the crude oil markets is mainly
attributed to this encouraging news, when the uncertainty on many fronts loomed
large at the beginning of the week. The outbreaks of the Delta variant of the
Coronavirus did very little to calm down the anxieties of the markets.
Since the pandemic is on the rise in Asia, one of
the crucial markets for the oil producers, the demand of crude oil in the
region may be a serious concern for the OPEC+; this is why they talk about
something that they did not discuss a few weeks ago – the risk of over-supply.
They may have made their calculations in the hope
that the pandemic was truly behind us: the outbreaks in China, India,
Indonesia, Thailand and Malaysia proved otherwise and may have prompted them to
rethink – and revise – short term plans in order to maintain the price at a
sustainable level for the producers.
On the other hand, producers want to make money in
the current circumstances while cashing in on relatively high oil price. This may
be a bone of contention for the prominent members of the OPEC+ who usually call
the shots.
