Economic Restrictions In The World’s Largest Economy Lowers Crude Oil Prices
Crude oil prices dropped lower on Tuesday amidst worries that new restrictions on businesses in the United States could threaten fuel demand recovery.
Also, expectations that OPEC+ might remove the cap placed on crude oil output from August, in a meeting scheduled for Wednesday, has sent Brent crude south.
Brent crude lost about 1.62% to trade at $42.04 per barrel by 6.25 am local time, after losing about 1% yesterday.
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Sell-offs in the energy derivative increased pace in the energy market after news filtered in about California’s Governor commanding a massive retrenchment of the state’s reopening, banning indoor restaurants, shutting bars, gyms, hair salons, and closing churches in hardest-hit regions.
Meanwhile, Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke about the OPEC scheduled meeting that oil traders are focused on. He said:
“Still, speculation on OPEC+ strategy ahead of OPEC’s Joint Ministerial Monitoring Committee meeting tomorrow could make for an exciting 24 hours.
“Existing plans call for OPEC+ cuts to taper in August after a one-month extension.
“While Russia has already indicated it expects to increase production in line with the agreement, there is the possibility that uncertainty around demand as a result of rising coronavirus infections will lead to another extension of the deepest initial phase of cuts.
“Traders do not expect the outcome to be hugely significant for oil either way. The most critical deliverable for OPEC+ is the continued demonstration of unity within the group.”