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  • Business - Market Data
  • Updated: July 02, 2021

Last-Minute Rebellion Within OPEC+ Stalls Oil Price Rally

Last-Minute Rebellion Within OPEC+ Stalls Oil Price Rally

Black gold prices edged lower on Friday after recent fundamentals revealed the Organization of the Petroleum Exporting Countries and allies (OPEC+) are not all on the same table regarding output levels.

Brent crude futures inched down 7 cents to $75.77 a barrel, after rising 1.6% on Thursday. U.S. West Texas Intermediate (WTI) crude futures were down 10 cents at $75.13 a barrel as of report time, having jumped 2.4% on Thursday to close at their highest since October 2018.

Both benchmark contracts posted strong gains on Thursday over a plan backed by Saudi Arabia and Russia for the Organization of Petroleum Countries and allies, together known as OPEC+, that was more cautious than investors had expected. The proposal was for the producer group to add back 400,000 bpd each month from August through December 2021.

Investors, however, are weighing on reports showing the UAE paused a deal at the last minute, triggering the all-important meeting to end without an agreement on their monthly crude oil production. The deal was suspended after UAE disclosed it will not support the deal until the baseline for its own cuts is reviewed upward, effectively raising its production quota by about 700,000 barrels a day.

Leading oil producers including Saudi and Russia, arbitrarily rejected the United Arab Emirate’s request, though oil traders would be hoping for a compromise with a strong revival in fuel consumption still in play.

The implication of such a narrative further meant the alliance might fall back on past agreements that asked for crude oil outputs to remain unchanged until April 2022.

WTI was on track for a 1.6% rise for the week with the U.S. crude market seen tightening as refinery runs pick up to meet recovering gasoline demand, while U.S. shale oil production has not risen at the same pace.

Brent was heading for a 0.5% fall for the week, reflecting concerns about fuel demand in parts of Asia where cases of the highly contagious COVID-19 Delta variant are surging.

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