OPEC will cut oil production by 100,000 barrels a day despite its agreement to increase its production.
A month after OPEC officials and its allies agreed to increase oil production in August to supplement the market’s low oil supplies. On Monday, OPEC officials stated that they will start cutting their oil production by 100,000 barrels a day starting next month.
The OPEC official noted in a statement that the upward adjustment of 1 million barrels a day was only intended for September.
The oil and energy markets recorded three constructive months of losses due to rising concerns about interest rates, inflation, and low supply distribution.
Over the past three months, global oil prices closed at nearly 20% of this year’s high, the biggest losses in the sector this year. Last week, U.S. oil prices declined by 7% as concerns about weaker economic growth rose.
Traders are getting mixed feelings in terms of the market’s future outlook. In China, the authorities are still combating COVID-19 as its cases rise in many cities. According to Beijing, there are many cities under lockdown, including the city of Chengdu, with over 21 million citizens under lockdown.
As for the commodity market, hours, after the OPËC statement was released Brent oil, declined by 3% to $92.86 per barrel. The U.S. West Texas intermediate declined to $86 per barrel, and natural gas decreased by 6%. We can say the same about gas prices in the U.S. Since June, gas prices have delivered mixed results and now have decreased. Since June, the average of $5 per gallon dropped to $3.79 per gallon on Monday
Today’s Wall Street open was lower as investors worried about an economic slowdown. The S & P 500 is down by 0.27%, the Dow Jones decreased by 0.50% and tech stocks posted negative gains today. Apple, Netflix, and Amazon were among today’s decliners, causing a 0.56% decline in Nasdaq stocks.
The market’s high demand is likely to increase if OPEC member countries cut their oil production supplies. Even though the Russian oil supply is 3700.000 barrels below its usual level, it has helped in stabilizing prices and cool demand.
Russian officials are saying that Russia will cut supplies to the non-friendly countries if the pressure keeps on. Rising energy costs in the Eurozone have reached their all-time high. According to the latest reports, the average increase in consumer product prices in Europe is +9%. Some countries are much higher.
It is unclear whether OPEC will change its cutting decision, but based on the CNN reports, there is one possibility. Reports say that if Iran can agree to a new nuclear deal with the U.S., the OPEC members might consider increasing their supply.
That said, based on recent events, the Wall Street growth process remains under the scoop. Market experts believe that it’s more likely that the Federal Reserve will increase its interest rates by 75bps due to the rising unemployment rate, the decline in added jobs, and the market’s mixed performance.