Analysts: oil prices will not drop below $ 60

The price of a barrel of Brent crude will not fall below $ 60, according to analysts polled by Tass on Wednesday.

These analysts attribute the recent price drop not to OPEC + ‘s decision to increase production quotas, but rather to growing fears that an increase in Covid-19 cases – especially the Delta variant – is blocking a economic recovery and therefore demand for oil.

The price of Brent crude oil fell sharply on Monday, just a day after the OPEC + meeting agreed to add 400,000 barrels of oil per day to the market from August, and each month thereafter until. ‘that the entire production agreement for the group has been unwound. .

Brent slipped more than 7% on Monday, but has since rebounded. Despite the unfavorable EIA and API inventory report on Wednesday that showed a surprise increase in crude oil inventories in the United States, the price of Brent crude rose more than 4% to $ 72.24 the barrel.

According to analysts polled by Tass, Brent will hover between $ 60 and $ 70 and likely not fall below that threshold, as further lockdowns are unlikely despite the Delta variant.

Vasily Tanurkov, director of the corporate rating group at Arca, said the drop in prices was due to a variety of events which came to a head on Monday.

“If you look at what basically happened in the financial markets on Monday, then almost everything fell apart: the stock markets, Asian, European, almost all commodities fell. This was more due to fears of a new wave of coronavirus: the incidence in the world is growing, and particularly in Southeast Asia. As a result, it could lead to stagnation in global demand, including for oil, ”Tanurkov told Tass.

Dmitry Marinchenko, the group’s senior director for natural resources and raw materials at Fitch, also agrees that oil will be between $ 60 and $ 70, as that is the level that is “comfortable for most oil producers.”

By Julianne Geiger For OilUSD

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