- Oil Production Cuts Standoff
- Oil Demand Concerns
- Declining U.S Stock Piles
Oil prices were slightly higher, Thursday morning, even as concerns about oil demand continued to rock the oil markets. A brewing standoff between Saudi Arabia and OPEC also threatened to curtail some of the gains made in recent weeks, especially on the production front.
Saudi Arabia- OPEC Standoff
U.S West Texas Intermediate futures rose by 0.3% to $39.90 a barrel. Brent Crude was also up by more than 0.2% to $42.19 a barrel after rising by more than 1.8% on Wednesday.
Time : 07-02-2020
Pivot : $39.81
Technical View : Long Above $40.01
Targets : $40.21 – $40.72 – $41.38 – $42.14
comments : Weak Bullish
Last Price: $39.96
The spike in oil prices comes at the backdrop of a standoff that threatens a new trade war in the oil business. Saudi Arabia has brought to task a number of OPEC members over their failure to abide by the cartels production cuts.
The Saudi energy minister, Prince Abdul-Aziz bin Salman has reportedly issued an ultimatum asking Nigeria and Angola to submit detailed pledges for extra oil production cuts. The hard-line stance threatens to trigger another production standoff that could lead to overproduction, conversely push prices lower.
Early this year, Saudi Arabia was entangled in a fierce production standoff with Russia that resulted in oil prices plunging to record lows. A deal that imposes a 9.7 million barrel a day production cut has helped stabilize prices above the $35 a barrel level.
Production is not the only headwind that could weigh on oil prices going forward. A spike in cases of coronavirus infections continues to arouse concerns about oil demand going forward. California and Texas have already imposed movement restrictions that could see oil demand going down in the world’s largest consumer of the black gold.
New U.S COVID-19 cases rose by whopping 50,000 on Wednesday. Amid the spike data by the U.S Energy Information Administration indicates that U.S crude inventories fell by 7.2 million barrels from record highs printed last week.
All eyes in the oil markets are on how the US. Will respond to the second wave of infections given its potential impact on oil demand conversely prices.