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Oil prices drop after OPEC closed the deal

Oil prices are falling on Monday morning. It followed OPEC+’s deal yesterday to increase production when the economic recovery is causing an increase in demand.

The group managed to overcome the impasse of the last meeting in which the United Arab Emirates (UAE) blocked an agreement for intending to review the productions. This Sunday, and August approaches – the month in which an increase in production by the group members and their allies was expected, an agreement has already been reached.

In reaction, oil prices are now decreasing. Brent crude was trading with a loss of 3.4%, or $2.54, at $71.05 a barrel. Meanwhile, WTI shed $2.64, or 3.6%, at $69.17 a barrel. Both benchmarks recorded their most significant declines since early April.

The members of OPEC will increase a maximum of 400,000 barrels a day each month until any previously established cut is reversed and production levels restored.

The agreement will also give the Emirates, Iraq and Kuwait higher production quotas as of May 2022.

Liquefied natural gas prices are on the rise worldwide. Increased demand in China and other parts of Asia is helping benchmark prices in Europe to reach decade highs.

On the other hand, US prices have surged due to hot weather and the US gas export boom.

US prices have also risen, partly due to hot weather and an LNG export boom. It suggests that a fully integrated international market is finally developing even though the US price remains far cheaper.

Indian LNG demand also hiked sharply in 2020 and economic recovery will further boost it this year. Besides, domestic upstream gas projects are seeing delays.

On the MCX, natural gas delivery for July climbed by Rs 3.30, or 1.21%, to Rs 276.90 per mmBtu.

Gas delivery for August was raised by Rs 3.20, or 1.17%, to Rs 276.30 per mmBtu.

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