Oil Prices May Correct Despite OPEC Hype Of No Cuts

Oil Prices May Correct Despite OPEC Hype Of No Cuts

 bulls are all smiles, having achieved the seemingly impossible: Not a single additional barrel of output was agreed by OPEC+ for August onward.

The truth is, trouble may just be starting for longs in the market.

After two days of unyielding talks between Saudi Arabia and the United Arab Emirates, OPEC+ decided it was best for the two former staunch allies—and now somewhat rivals—to discontinue negotiations over next month’s export quotas.

There was no official communique to the effect from the 23-nation OPEC+, which groups the 13 original members of the Saudi-led Organization of the Petroleum Exporting Countries and their 10 allies steered by Russia. 

Those with knowledge of the matter, however, told the media that in the absence of an agreement for August quotas, the cartel’s current production limits will remain in place.

OPEC+ was supposed to have agreed on a production hike of at least 400,000 barrels per day for next month. Oil markets spiked on the news as depriving the global economy of vital extra supplies amid the recovery from the coronavirus pandemic was interpreted as super bullish for crude prices. 

Global crude benchmark soared in Monday’s London trade to above $77 a barrel, a