While oil has managed to recover a bulk of losses by the end of the previous week, downbeat moods returned at the beginning of a new week. A drop is reasoned with the same factors that led to a sell-off at the beginning of a previous week. Lack of agreement between the United Arab Emirates and Saudi Arabia creates a risk of the UAE abandoning the supply cut agreement altogether. This in turn could encourage other OPEC member countries to do the same. Saudi Arabia wants production to be gradually restored, especially as new virus variants threaten demand outlook once again. Moreover, China imports decline as the country attempts to limit upward pressure on prices. China has accumulated massive oil stockpiles during the pandemic. Interestingly, word on the street is that the upcoming DOE report will show flat week-over-week change in oil stockpiles, what may be a surprise following large draws in recent weeks.
Oil is moving lower today in spite of a rebound on EURUSD market. Increased supply from OPEC members as well as pandemic uncertainty are main factors driving oil prices now. Source: xStation5
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