July 16 (Lagos) - All eyes will be on the OPEC+ meeting today, as the oil producers are expected to decide on whether to extend the record production cuts of 9.6 million barrels per day (bpd) or taper to 7.7 million bpd starting in August.
In the face of global instability and the uncertainty wrought by the coronavirus pandemic, the cartel enforced record production cuts back in April as the demand for crude evaporated. Initially, the production cuts were planned to run until the end of June, but they were eventually extended to July.
Now the question on the mind of many investors is what impact tapering the cuts will have on Oil prices, which appreciated over 30% during the second quarter of 2020. Although the demand for crude has jumped in recent weeks, rising coronavirus cases in the United States along with some cities in other major economies reimposing shutdowns have the potential to hit demand.
Markets seem to be pricing in a taper of production cuts by OPEC+ starting gradually from August. However, should the cartel move ahead with extending the record cuts of 9.6 million bpd beyond this month, this could inject WTI Oil bulls with enough fuel to truly conquer the $40 resistance level.
reporting from easykobo.com on Thursday, July 16 2020 from Lagos, Nigeria
Source - written by Lukman Otunuga (PIC), Senior Research Analyst at FXTM