Oil continues to grow every day, and prospects for the future seem very optimistic if the global economic recovery persists.
June 2, 2021, | AtoZ Markets– Today the price of Brent crude oil has traded above 70 dollars per barrel, and at this time the WTI reference has a base price of close to 68 dollars per barrel, showing maximum levels since two years ago.
After a 2020 framed in the pandemic, the cessation of restrictions in most countries has been supporting the optimism in this raw material and that is the reason for the increase in its price at present.
Most financial entities consider that the price of black gold could increase a little more in the remainder of the second half of the year. The increase in productivity in China, the opening and lifting of restrictions by Covid 19 at a global level, the increase in air and land transportation and the weakness of the dollar in the medium term would support this perspective.
Another important aspect to consider is the low interest rates that the main central banks are currently managing, something that boosts the price of commodities in the short and medium term. However, we must be alert to whether this circumstance changes in the world’s main economies.
How oil demand works
Goldman Sachs has said in recent days that world demand could increase by 4.6 million barrels per day until the end of the year, due to the recovery of the markets given the increase in consumption in Asia and Latin America.
In the Bank’s words “Mobility is increasing rapidly in the United States and Europe, vaccinations are accelerating and blockades are lifting, and freight transport and industrial activity are also rising.”
Remember that in April OPEC raised its 2021 crude oil demand forecast by 190 billion barrels per day to average 96.46 million barrels per day.
May Figures According to OPEC
OPEC oil production in May was 25.52 million barrels per day, an increase of 280,000 barrels per day since April.
OPEC and its partners, 24 countries in total, have fully complied with their pact to keep production stable, thus managing to sustain oil prices, although a drop in Iranian exports and involuntary reductions in African members limited this rise.
Oil at two-year highs
OPEC met yesterday, and in its official communiqué reaffirmed the existing commitment of the participating countries in the DoC to a stable market in the mutual interest of producing nations; the efficient, economic and secure supply to consumers; and a fair return on invested capital.
Also reconfirmed the existing commitment of the 10th OPEC and non-OPEC Ministerial Meeting in April 2020, amended in June, September, and December 2020, as well as in January and April 2021 to gradually return 2 million barrels a day (mb/d) of the adjustments to the market, with the pace being determined according to market conditions.
This has led to an increase in the price to levels not seen two years ago, giving rise to a positive outlook for growth in the second half of the year for this commodity if global fundamental conditions remain on the same current path.
OPEC or OPEP?
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The five Founding Members were later joined by: Qatar (1961) – terminated its membership in January 2019; Indonesia (1962) – suspended its membership in January 2009, reactivated it in January 2016, but decided to suspend it again in November 2016; Libya (1962); United Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973) – suspended its membership in December 1992, reactivated it in October 2007, but decided to withdraw its membership effective 1 January 2020; Angola (2007); Gabon (1975) – terminated its membership in January 1995 but rejoined in July 2016; Equatorial Guinea (2017); and Congo (2018).
When the acronym OPEC is translated into Spanish, it becomes OPEP.
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