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Oil Prices Surge Amid OPEC’s $80 Target, Supply Concerns, and Growing Market Uncertainty
The Organization of the Petroleum Exporting Countries (OPEC) is aiming to push oil prices to $80 per barrel or higher. Their efforts to achieve this goal received support from Russia, a non-OPEC member but a significant oil-producing country and a key ally of OPEC.
Since June, oil prices have climbed by 13%; 9% of the total percentage came only in July. The increase in oil prices is due primarily to lower oil production. Russia and Saudi Arabia are pushing oil prices to a target level of $80 a barrel.
Still, since the military invasion, any actions supported by Russia have been a huge concern for the U.S. and its Western allies.
Some of these concerns are related to the market’s oil supply and have been raised as a result of Russia’s activities against Ukraine and OPEC’s conversations about probable reductions in oil output. “Besieged by the oil cartel’s rhetoric over cuts” denotes that market perception has already been affected by OPEC’s pronouncements about possibly decreasing oil output further, which has increased supply fears.
Meanwhile, oil prices are continuously increasing for the fourth straight week, posting a total of a 9% increase in the past two weeks. On top of that, OPEC maintains its assertive approach, with Suhail al-Mazrouei, the UAE’s energy minister, stating they are ready to act if further oil market control is necessary, emphasizing their influence. Plus, the potential of OPEC to dramatically affect oil prices is shown by its willingness to step in notwithstanding continued concerns about the world’s supply.
Moving to today’s oil market indexes, as of 15:30 a.m. ET, the West Texas Intermediate was up to $66.4 per barrel. Brent oil climbed to $80.80 per barrel.
That said, experts forecast that WTI prices will trade below $77 in the next week, while the future remains uncertain.
OANDA analyst Ed Moya noted that the following week’s energy conferences, key oil company results, weekly stockpile data, and global flash PMI readings should all be closely watched by traders. These occurrences may provide insightful information about possible changes in supply and demand. According to Moya, WTI crude oil may keep following its pattern of consolidation and hover between $74 and $77 at this time.
Plus, inverters will also be closely paying attention to the July 26th interest rate hike policy meeting. The probabilities are in favor of lifting interest rates by a square basis point.
Moving to the stock market and the second quarter earnings report season, The general mood of the semiconductor stock sector improved thanks to Qualcomm Incorporated. However, the chipmaker’s announcement that sales would decline 10% as a result of a worsening global economy worried chip investors. As investors anticipated their quarterly reports, major technology giants, including Alphabet and Microsoft, saw their shares move flat to lower. American Express’s Q2 results were mixed, with profitability exceeding projections but revenue falling short as a result of lower credit card usage. AutoNation exceeded Wall Street expectations for Q2 but fell 11%. Prior to significant tech results and the approaching Federal Reserve decision, utilities and healthcare saw growth. With an emphasis on Chair Powell’s speech, bets on a Fed rate rise are virtually priced in.
