Oil prices fell on Monday and Brent slumped after four days of gains as investors and traders await key talks after the group’s major producers’ disagreement to increase their market share and volumes.
Brent crude was down 40 cents, or 0.5%, to $75.77 a barrel as of 0131 GMT, after falling 1 cent, the first weekly drop in six weeks in last week. West Texas Intermediate (WTI) crude was down 30 cents, or 0.4%, to $74.86 a barrel after gaining 1.5% in last week to be as sixth consecutive week.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies voted on Friday to increase production by around 2 million barrels per day from August to December 2021 and to extend the remaining production cuts until the end of 2022. The United Arab Emirates (UAE) did not allow an agreement to be reached.
Increasingly diverging national interests are influencing OPEC+ policy as oil-based economies need more crude as they recover from the COVID-19 pandemic.
The OPEC+ alliance is raising the bar, helping to rebalance the market after the collapse in demand. However, a crack, separation, rupture can upset all balances in accordance with an imballanced supply and lead to a collapse in prices.
Saudi Arabia’s energy minister called on Sunday for reconciliation and rationality, despite the UAE’s opposition to the proposed OPEC+ deal.
There are delicate balances to be considered in addressing the current market situation and maintaining the ability to react to future developments. In addition, it should not be forgotten that the pandemic process is still ongoing and the uncertainty about the supply from Iran and Venezuela.
In the United States, energy companies increased the number of oil and gas rigs and drilling volumes in the third week of the last four weeks.
In a closely watched report on Friday, Baker Hughes Co said the number of oil and gas rigs, an early indicator of future production, rose 5 units in the week of July 2 to 475, the highest level since April 2020.
