Jun 12, 2023

Crude oil remains rooted around the $70 mark, but OPEC members are watching.

USOIL – Daily Chart

USOIL – Daily Chart

Oil is still holding a bearish tone, with a potential for the price to test the $70 mark this week. 

Saudi Arabia and its OPEC+ allies are trying to battle “uncertainties and sentiment” in the oil market as the group aims at short sellers, its energy minister said on Sunday. 

“I think the physical market is telling us something, and the futures market is telling us something else,” Prince Abdulaziz bin Salman told a business forum in Riyadh. “That’s why we keep taking these precautionary measures.” 

Saudi Arabia announced a unilateral cut of 1 million barrels daily for July last week. The decision came after an OPEC+ meeting in which other producers agreed to extend their reductions into 2024.

Crude Oil Forecast

“To understand OPEC+ today, it’s all about being proactive, pre-emptive, and precautionary,” the minister said. Last week’s meeting also brought a higher production quota for UAE and Russia, not committing to cut output further. Prince Abdulaziz said he would reward countries investing money to boost their oil production with a higher allocation for output. 

US crude oil stocks fell unexpectedly last week as refiners pumped out fuel to the highest level since 2019 during the Memorial Day holiday, the Energy Information Administration (EIA) said. 

“Refiners have to have some sense that demand is pretty good moving forward from here, so that’s going to draw down on crude oil storage,” said Bob Yawger at Mizuho.

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