The 8th OPEC International Seminar is underway in Vienna and the participants are doing their utmost to validate their actions (production cuts) as effective for their – officially secondary – purpose: to boost the price of Oil. The most active is surely Saudi Prince Abdulaziz bin Salman. He stated confidently that ”global oil demand is rising, central bankers are working to tame inflation, and OPEC+ output restraint will turn the tide of exaggerated negativity that has flooded the market”. “You cannot change a negativity that is emanating from let’s say 10 million traders” he continued ”but the negativity cannot last, and I am very optimistic”.
On July 3, the kingdom said it would extend the 1 million bpd cut for August, along with concurrent commitments from Russia to lower its crude exports by 500,000 bpd and Algeria to rein in 20,000 bpd of output.
The organization’s analysts see demand for OPEC crude rising to 29.87 million bpd in the third quarter of 2023 and 30.59 million bpd in the fourth quarter, with recovering air travel and industrial activity in China leading the way. By comparison, OPEC’s 13 members pumped 28.07 million b/d in May, which is set to fall significantly in July, with the extra 1 million bpd Saudi cut.
“Tools in our kit are working,” Prince Abdulaziz finalized: “We will do whatever is necessary.”
The result of all this is that the price of USOIL.S has been rising for six sessions and after having hit a low of $67.03 on 28th June (still very close to that support area which we have been following for some time, $67.40) it is now back towards $72 (the range since May would have the top in the $73.25 area, but it is showing slightly descending highs).
That said, despite all efforts, Crude has been sideways in an approximately $5.5 wide range for the past 3 months. A change would come from a break of the support or of the trendline started in March 2022 just shy of $130.
Of course with all the support from the producer cartel, what if China shows more resilience than it seems or demand simply won’t fall off the cliff as the majority of traders are expecting? These are just some of the questions to which the answers remain to be seen.
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