Oil prices consolidate after surpassing $120 per barrel
Oil futures edged down, consolidating after the U.S. benchmark pushed above the $120-a-barrel
threshold in the previous session on 7 June.
Crude oil prices have retreated from three-month highs, but demand is expected to rebound as
China ends COVID-19 restrictions, and concerns over tight supplies remain as sanctions and
embargoes are seen taking Russian crude off the market.
A “political” surplus that was created in April and May as a result of very minor Russian export
reductions, major releases from strategic oil inventories by numerous countries, and China’s
COVID-19 lockdowns is now winding down.
For inventories to normalize by late 2023, Brent must average $135 a barrel in the second half of
2022 and the first half of 2023, up $10 per barrel from their prior prediction.
Meanwhile, OPEC+ — the Organization of the Petroleum Exporting Countries and its partners —
increased output last week, but it had little effect on oil prices. OPEC+ decided to increase its
output target by 648,000 barrels per day in July and August, up from the previous increments of
432,000 barrels per day. However, experts have observed that OPEC+ has recently failed to fulfill
its production objectives, casting doubt on the group’s ability to meet the greater target.