Demand concerns weigh on market sentiment
Oil price took a hit on Monday after PMIs for China and Europe showed weakness in factory activity as Covid-19 flare-ups and a weakening global outlook weighed on demand. Nevertheless buyers became more active after Reuters revealed results of the OPEC monthly secondary sources survey. In July output increased 310k bpd, while the cartel had pledged at 412k bpd increase. Quota-bound members undershoot July target by 1.3 million bpd. Only UAE and Kuwait meet their full quotas. Saudi Arabia did manage to increase production by 150k bpd to 10.75 mbps however it still remains below the 10.833mbpd target. Nigeria was the worst performer. Production reached only 1.13 mbpd compared to 2.33mbpd allowed due to ongoing pipeline and production difficulties. Members of the OPEC+ cartel will meet this Thursday to discuss production levels for September and additional volatility is expected.
OIL - buyers struggle to break above the major resistance zone around $106.15 - $107.15. As long as the price sits below another downward move towards support at 98.40 may be launched. This level is marked with previous price reactions and upward trend line. Should a break lower occur, downward move may accelerate. Source: xStation5
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