Analysts at Rabobank expected oil prices will likely stay at elevated levels as the OPEC+ is seen keeping its current course. They see a mixed technical picture for the spot Brent.
Key Quotes:
“Oil markets started off the week under pressure as continued speculative “long” liquidation amid delta variant demand concerns weighed on prices. However, in an ironic twist, the oil market got a boost from an unlikely source on Wednesday as the Biden administration announced it was pleading with OPEC+ members to increase oil production to stem inflationary pressures from rising domestic gasoline prices.”
“Looking forward, the oil market is heading into next week with a mixed technical picture. On the bullish side of things, the spot Brent contract recaptured the psychologically important $70/bbl level on the upside this week, but on the other hand, the market remains below its 20-day moving average.”
“Looking at the big picture though, inflation remains a key concern for consumers, politicians, and investors alike. This dynamic was on full display this week as the Biden administration's pleaded for OPEC+ to pump more oil and reduce gasoline prices.”
“We do not expect OPEC+ to change course on its already agreed to production increases and, as such, we expect oil prices will likely stay high and US balances will remain tight. Furthermore, this dynamic could work to reignite inflation-driven commodity index flows from large asset managers that have been so important to the oil market this year.”