Oil Prices Rise as Demand Improves
Oil prices rose on Monday as demand for the commodity improved. Brent crude, the international benchmark, was up 0.7% to $68.17 a barrel, while West Texas Intermediate, the U.S. benchmark, was up 0.6% to $65.14 a barrel.
The rise in oil prices came as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to extend production cuts until the end of August. The group had previously agreed to cut production by 9.7 million barrels per day (bpd) in May and June.
The production cuts have helped to support oil prices, which have been volatile in recent months due to the coronavirus pandemic. The pandemic has caused a sharp drop in demand for oil, as travel restrictions and lockdowns have reduced the need for fuel.
OPEC+ Agrees to Extend Production Cuts
OPEC+ agreed to extend the production cuts until the end of August, in order to support oil prices and prevent a further drop in demand. The group also agreed to reduce the production cuts to 7.7 million bpd in July and August.
The decision was welcomed by oil producers, who have been struggling with low prices due to the pandemic. The production cuts have helped to support prices, and the extension of the cuts is expected to further support prices in the coming months.
The production cuts have also been supported by the U.S., which has imposed sanctions on Iran and Venezuela, two major oil producers. The sanctions have reduced the supply of oil, which has helped to support prices.
Demand for Oil Improves
The demand for oil has been improving in recent weeks, as countries begin to ease travel restrictions and reopen their economies. The International Energy Agency (IEA) said last week that global oil demand is expected to rise by 6 million bpd in the third quarter of this year, compared to the same period last year.
The IEA also said that demand is expected to continue to improve in the fourth quarter of this year, as more countries ease restrictions and reopen their economies. This is expected to further support oil prices in the coming months.
Oil Prices Expected to Remain Volatile
Despite the recent rise in oil prices, analysts expect prices to remain volatile in the coming months. The demand for oil is still expected to remain weak, as the pandemic continues to affect the global economy.
In addition, the U.S. and other countries are still imposing sanctions on Iran and Venezuela, which could further reduce the supply of oil. This could lead to further volatility in oil prices in the coming months.
Outlook
Oil prices have been volatile in recent months due to the coronavirus pandemic. The OPEC+ production cuts have helped to support prices, and the extension of the cuts is expected to further support prices in the coming months.
The demand for oil is also expected to improve in the coming months, as countries begin to ease travel restrictions and reopen their economies. However, analysts expect prices to remain volatile, as the pandemic continues to affect the global economy and sanctions on Iran and Venezuela could further reduce the supply of oil.