Oil producers review production levels as demand returns
Oil prices hover around $ 75 a barrel, which means gasoline prices are also on the rise in the United States, just in time for the summer driving season. The oil market could see further movement this week as OPEC and its allies are expected to meet by video conference Thursday.
OPEC has been meeting more frequently since last year as the global pandemic wreaked havoc on demand for oil. That way, the group could be ready to move production quickly as needed when the savings come back online, said Sara Vakhshouri, president of SVB Energy.
“I would say the key word is predictability,” she said. “They tried to create a predictable market by giving a timeline to 2022 on how OPEC is going to increase production.”
OPEC already predicts that there will not be enough oil to meet demand in August. This could lead to even more production in places like Saudi Arabia and Russia.
But Ellen R. Wald of the Atlantic Council’s Global Energy Center said oil prices were on the rise because of what was happening in the United States.
“The really big story, I think, about what helps keep prices up is that US production has not returned to the same levels as in 2020,” Wald said.
Shareholders demand a return on their investment, Wald said, which has led US producers to cut spending and keep production at a stable level.