-- Al Root
Who's afraid of OPEC? Not oil traders.
OPEC officials meet today to discuss output, and nearly everyone seems to believe that production increases are coming. Benchmark oil prices are up about 1.9% anyway, after gaining 54% during the first half of 2021.
Surging demand was the story of the first half of 2021. The global economy has done better than almost anyone expected coming out of the public health crisis-induced recession of 2020, pushing up the price of oil and other commodities.
Supply stands to be the story of the second half of 2021. Investors and traders can expect more production of everything as companies try to take advantage of rising prices. But will it be enough to overwhelm demand?
Unlikely. OPEC is currently pumping roughly about 25 million barrels of oil a day, down from about 30 million a day before 2020. Globally, oil producers, including OPEC nations, are pumping about 74 million barrels a day, down from about 82 million before 2020.
That 8 million barrel a day gap between pre- and post-2020 production is a big reason traders aren't that nervous about the July OPEC meeting.
The world could use the oil.
-- Al Root
(END) Dow Jones Newswires
July 01, 2021 07:56 ET (11:56 GMT)
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