The oil prices plunged by more than $4 per barrel, heading to its worst day since March after OPEC+ agreed to boost production output, raising fears of a surplus as rising COVID-19 infections threaten demand.
- Crude oil year-long jump has been faltering over the last two weeks, with new supply undermining the case for higher prices. Brent crude lost 5.8%, at $69.36 per barrel, and US futures dropped by 6.4% at $67.25 per barrel.
- John Kilduff, a partner at Again Capital, expects a significant deficit in terms of supply versus demand, and additional barrels will deflate and kill the oil price rally.
- Major banks argued the market would continue rallying, with Goldman Sachs emphasizing an upside to the market. The OPEC deal was in line with Goldman Sachs’s view that producers should invest in maintaining a tighter physical market while guiding higher future capacity.
Now, OPEC+ is maintaining about 5.8 million crude barrels per day out of the market, a 2 million bpd by year-end.
EURUSD gains +0.01%, USOIL down -6.26%
Source: Reuters