By Ilana Cardial – Oil contracts rose in the futures market in this first session of the week, on a day of reduced liquidity due to the holiday in the United States. Supported by the weakening of the dollar abroad, the asset also benefited from supply concerns. The new lockdowns in regions of China took a back seat.
In the electronic trading of the New York Mercantile Exchange (Nymex), the barrel of WTI oil with delivery scheduled for August rose 2.06%, to US$ 110.66, at 15:30 (GMT). Brent’s for the following month, on the other hand, closed up 1.68% (US$ 1.87), at US$ 113.50, on the Intercontinental Exchange (ICE).
ING says that a key factor in oil market negotiations is the Organization of Petroleum Exporting Countries (OPEC) inability to significantly increase production and achieve proposed targets. According to Bloomberg, the cartel’s production fell by 120 million barrels a day in June, month-on-month. With the exception of the United Arab Emirates and Gabon, all other member states have failed to reach the levels set as targets, says the Dutch bank.
“The group’s failure to achieve these more modest supply increases makes it pretty clear that they won’t come anywhere near the more aggressive supply increases for July and August and so the gap between where they are producing and where they should be producing will only widen. ”. Last week, OPEC and allies decided to stick with their plan to increase oil production by 648,000 barrels a day in August.
The dollar’s devaluation against certain currencies also supported the commodity throughout the session, although fears about global recession remain. Also today, China enacted new lockdowns for more than 1.7 million inhabitants in two of its provinces after a new outbreak of covid-19. The news, however, did not deter oil gains.