Is the Oil Rally Set to Cool Off?

(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)

Is the recent strong growth in oil prices about to become less robust? One of Rigzone’s regular prognosticators thinks so. Find out why, along with other perspectives, in this preview of what to watch this week in the global oil market.

Jon Donnel, Managing Director, B. Riley Advisory Services: OPEC+ will continue to dominate the headlines until the group can reach an agreement on near-term supply and any adjustments to baseline production levels going forward. However, keep an eye on U.S. crude production that ticked to a new calendar year high last week and that has been trending above 2020 exit levels for the past month. Continued steady increases in U.S. rig and frac spread counts support higher output and with demand holding up commodity prices, operators will be incentivized to get more supply to market to bolster cash flows.

Barani Krishnan, Senior Commodities Analyst, Investing.com: More downward pressure on oil prices or, at the very least, a restraint on the rally of the past two months as worries grow about OPEC+ production hereon.

Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: The market will now be watching for any decision by OPEC+ to hold a meeting and, if so, to decide on output increases. Or we may see the UAE increase output on its own. The cancellation of spectators at the Olympics in Japan is no small matter. It’s another sign of a possible resurgence of the coronavirus. In the U.S., there are small pockets of increasing cases of COVID-19 and its delta-variant in counties with low vaccination rates. One hospital in Southwest Missouri is already reporting that its intensive care unit beds are full.

To contact the author, email mveazey@rigzone.com.