Oil prices have established below $70 a barrel this Wednesday, after enduring weeks of slight losses, as fears of the new covid-19 variant may hit economies worldwide, thus hitting the expected economic recovery. The United States government said that, in order to avoid crisis, OPEC must boost oil production.
Firstly, as we reported previously, Brent price went up 35% this year, supported by production drops by OPEC; however, last week the mis suffered its first step backs with weekly losses after months; precisely on worries that travel restrictions after Delta would hit demand.
Secondly, the White House said in a statement on Wednesday that the Biden administration had urged OPEC and its partners to boost production. “At a critical moment in the global recovery, this is simply not enough.” Said Biden’s national security adviser, Jake Sullivan quoted by Reuters; referring to the recent agreement by OPEC to slightly boost production.
Thirdly, this Wednesday during the early session, Brent crude was down 77 cents, 1,1%, and ended at $69,86 per barrel; this decrease happened just after a 2,6% rally on Tuesday. While the West Texas Intermediate was down 74 cents, or 1.1%, to $67.55, after a 2.7% jump on Tuesday.
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U.S. needs more oil production
Moreover, OPEC and its allies, known as OPEC+ had a meet in July, as we reported; they agreed to boost production by 400,000 barrels a day a month starting in August until the rest of their output cuts are phased out. Indeed, the oil producing countries have been gradually easing a record cut of 10 million bpd made in 2020; after the global pandemic.
In addition, earlier today, Brent crude was trading above $70 a barrel, as a sign that the growing demand in the U.S. is somewhat offsetting the demand declines in Asia; as particularly China, the world’s biggest oil consumer, is struggling with Delta.
In fact, data cited by Reuters, showed U.S. crude and gasoline inventories fell last week, while the U.S. Energy Information Administration (EIA) said U.S. job growth and increasing mobility had boosted gasoline consumption so far this year.
Finally, according to the U.S. government, the current output is not enough to curve the crisis, or to avoid the global economic recovery. On Tuesday, industry group the American Petroleum Institute said U.S. crude stocks fell by 816,000 barrels and gasoline stocks dropped by 1.1 million barrels last week.
