🤔 Crude Oil Price Fluctuates as if it followed the path of the Sun across the sky!

 


The oil price is falling and the pattern of fall on a given day remains puzzling, though.

In the past few days it was as if the crude oil price followed the apparent movement of the Sun across the sky!

In the early hours of the day when the markets in the Asia open, the price picks up only to fall again as the day wears on.

They mystery deepens when the investors’ screens go green in the very region that is most affected by the Delta variant of the Coronavirus nowadays. Of course, they turn red too, when the markets in the rest of the world open.

In short, the price fluctuations just defy the logic: the uncertainties in the markets are many – and rising; the viability of US stimulus package is widely debated among the decision makers; the Chinese economy has hit the buffers; there are renewed fear of Middle East plunging into turmoil, yet again; the Delta variant is spreading fast across the globe and lockdowns are imminent in many parts of the world.

The main worry for the markets at present is the situation in Asia. The pandemic has raised its ugly head without sparing any nation in the region, which in turn brings down the demand for crude oil; there is no indication to imply the light at the end of the tunnel yet, as far as Asia is concerned.

The OPEC+, meanwhile, says there is no need of heeding the request by the White House to increase the production. OPEC+ argues that in light of the falling demand, its daily increase of 400,000 bpd, agreed by the members, from August to December is good enough to maintain the price at a sustainable level.

If the US curtails the stimulus package, however, the US may be compelled to address the issue again while setting the focus on the OPEC+ again if the inflationary pressure starts biting.

Although the OPEC+ says it has no intention of increasing the output, it doesn’t offer a cast-iron guarantee that its position will not change for the next few months; Saudi Arabia, its de factor leader, will not make any decision to antagonize the US, especially when the Kingdom is at the mercy of US Patriotic missile system to avert streams of explosive-laden drones from Yemen.

No model or algorithm predicted the predicament of the oil markets a few months ago and some forecasts, such as hitting the crude oil above $100 that simply bordered on outrage, have just gone up in smoke.

 

 

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