Tuesday, June 29, 2021

Oil Falls Sharply Ahead Of OPEC+ Meeting


As OPEC+ prepares for its next meeting to discuss easing its oil output restrictions for the group, Europe and the United States are possibly staring down the barrel of the Delta variant—and that combination of factors is sending oil prices sharply downward.

Both the WTI and Brent benchmarks were trading down more than 1.5% on Monday as various health experts suggested that the Delta variant of the coronavirus could cause “dense” outbreaks in U.S. states that have relatively low vaccination rates.

In Europe, Portugal, Spain, and Germany have all issued new travel restrictions to mitigate the new variant’s spread.

Moscow and St. Petersburg both reported on Monday their highest death toll, yet as the Delta variant represents about 90% of all new cases. Tighter restrictions are being implemented in Moscow, such as sending a portion of non-vaccinated employees home, and ordering restaurants to disallow anyone in who has not be vaccinated.

The Delta variant couldn’t have come at a worse time for OPEC+, who has been champing at the bit to regain lost market share from its desperate attempt to withhold production in hopes of rebalancing balance the market during the worst of the pandemic.

With oil prices sharply rising over the last couple of months, OPEC could no doubt see the light at the end of the tunnel, with most analysts expecting OPEC to announce this week an easing of its production cuts in line with increased demand. Analysts were even suggesting last week that OPEC’s likely decision to ramp up by 500,000 bpd might not be enough.

But travel and business restrictions in parts of the world could derail OPEC’s plans.

WTI was trading at $72.92 at 4:14 p.m. EDT, down 1.53% on the day, while the Brent benchmark was trading at $74.71 at that time, down 1.93% on the day.

By Julianne Geiger for Oilprice.com

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