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Oil Cant Find Source of Demand

OPEC and its allies need to find a balance between supporting oil prices and keeping U.S. crude production at bay, a strategist told CNBC this week as the oil-producing group starts to roll back supply cuts. The alliance’s historic production cuts of 9.7 million barrels per day expired on July 31 this year. From August, the cuts will be tapered to 7.7 million bpd.

Oil Can’t Find Source of Demand

Oil prices fell on Monday due to oversupply concerns, Reuters reported, noting that oil output already increased by 1 million bpd in July when Gulf countries ended their voluntary extra supply curbs. OPEC in April made a deal to reduce supply to the market in a bid to support prices, which went into a “free fall” earlier this year amid demand destruction due to the coronavirus and a price war between Russia and Saudi Arabia.

Now they’ve restored the balance, prices have recovered, but they have to be very careful because they don’t want to be the victim of their own success,” he told CNBC’s “Capital Connection” on Monday.

U.S. West Texas Intermediate crude futures were down 1.22% at $39.78 a barrel during Asia’s afternoon trade, while Brent crude was down 0.94% at $43.11 a barrel. Driscoll also said he’s “very skeptical” about where oil demand is going to come from, given that travel plans are still getting scrapped during the summer holiday.

Source: FXPro