July 19, 2021, | AtoZ Markets– Oil prices fell more than 2% on Monday after OPEC and its allies agreed to end oil production cuts.
OPEC decided to adjust upward their overall production by 0.4 mb/d on a monthly basis starting August 2021 until phasing out the 5.8 mb/d production adjustment, and in December 2021 assess market developments and Participating Countries ’performance.
Also, OPEC decided to adjust, as of May 1, 2022, the baseline for production adjustment calculations according to the table:
Oil Prices Fell Sharply on the News
Crude oil prices fell sharply following news of the agreement reached by OPEC. The price of a barrel of Brent oil today has operated at $69.36, losing about $4.23 compared to the previous closing of the brent price (delivery September 2021) on the European stock exchange ICE.
2019 = +29,01%.
2020 = -21,75%.
2021 = + 39,30%.
1 year= + 66,40%.
3 years = – 1,16%.
5 years = + 53,22%.
Opportunity for Investors
For some analysts, this decline in prices could be a new opportunity for investors. Some experts consider that it is a good time to buy this raw material, if we consider that during the next six months production and inventories are in lower figures than world demand.
However, we must not forget that the uncertainties about Covid and some issues such as Iran will continue to affect the oil price during the following months.
Currently the price is very close to the support of the daily 100 EMA ($69,13). It is very important this area is not broken, and that the daily candle ends above this level. At the bearish level, the nexts areas to be considered are at $68,11 and $67.87.
It is very important that tensions on Covid ease and that global growth figures remain stable so that the price can regain strength. United States reduced their crude oil inventories by 75 million barrels since April 1, and that’s indicative of what’s happening around the rest of the world.
This situation could re-incentivize purchases of oil and take it back to the levels above the $ 70 and $ 75 that it previously presented.
Do you think this is the right time to buy oil?