Oil prices tick back up as economies reopen, OPEC extends production cuts
Oil prices tick back up as economies reopen, OPEC extends production cuts
The oil cartel OPEC and OPEC-adjacent Russia held a virtual meeting over the weekend where it decided to extend record cuts in oil production through July with the intention of keeping oil prices up. That won’t help consumers at the gas pump, but it will help U.S. oil producers.
Global demand for oil fell off a cliff as country after country locked down during the pandemic. That’s meant lower gas prices for consumers, but a tough time for oil producers.
Now that countries are starting to open up, oil price trends are reflecting the change.
“Key parts of the world have gotten oil prices back almost to $40 a barrel,” said Robert Johnston with the Eurasia Group. “And remember, we had negative pricing for U.S. oil in April. So it’s come back a long ways. So the question is, where do you go from here?”
Maybe not that far says Louise Dickson at Rystad Energy. She says oil’s recovery will be slow and stunted, “by just sort of the sheer economic impact of countries and economies losing GDP. Overall, lower household spending, less business travel, fewer people buying new vehicles.”
Any recovery will also depend on what happens next with the pandemic.
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