Crude prices were a bit soft on Monday. Russia which had agreed to production cuts along with other nations is showing signs of discord, which may have an impact on oil prices.
The OPEC + countries had agreed to production cuts previously. More than 20 nations had agreed to the stipulated production cut of crude oil. Further, the sanctions imposed on Venezuela and Iran had tightened production supply.
These factors have contributed to removing the supply glut that has improved oil prices. Analysts say that oil prices will hover around $70 per barrel for the present.
Currently, The U.S. has been increasing its production supply which will increase oil availability in the market for the second half of the year.
OPEC countries are expected to meet in July and talks will be held on the production levels to be maintained. According to the earlier agreement, these countries along with Russia have agreed to cut down production by 1.2 million barrels per day from the beginning of the year till June.
Saudi Arabia has been leading the OPEC countries in decreasing the output of crude oil to maintain the balance in crude prices.
However, with the United States increasing production, Russia and the OPEC countries may increase their production output too. Anton Siluanov, the Finance Minister of Russia has said that Russia may increase its output level to compete with the U.S. and to improve market share.
However, it is feared that if this happens, crude prices may fall drastically to almost $40 per barrel with heavy competition and excess production.
The National Oil Corp head in Libya has however said that renewed fighting may erode crude production.
Merrill Lynch Bank of America expects a spike in crude prices by the end of the year. The weak dollar and high demand for marine fuel may lead to an increase in prices, it said.