Is an oil rally reversal on the way?
Trump is getting flak for high prices at the gas pumps
Oil prices drifted lower today due to the prospect of the first increase in output from OPEC nations (including Saudi Arabia and the UAE) since 2016. The price of the commodity is down over 1.50% since last week (see the chart below).
OPEC cuts to supply are a big part of the reason why oil prices have been climbing over the last year (with Brent Crude notching a 52.57% gain), but if these countries choose to start boosting their output again, (partly to compensate for a lack of supply from Iran and Venezuela) the rally could come to an end. Commerzbank strategist Carsten Fritsch said: “This discussion about possible OPEC supply increases after the June meeting has put a brake on the oil price, so $80 is a big hurdle to overcome.”
Senate Democrats in the US are also urging President Trump to reign in OPEC due to pump prices being at a 3-year high, but unless he chooses to give Iran or Venezuela a pass on sanctions (unlikely), there’s not much he can do.
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