Oil Prices Set for Third Weekly Loss in a Row

Crude oil prices were on course to end the week with the third consecutive loss after OPEC+'s latest meeting surprised observers with the possibility of some supply returning to markets later this year.

The prospect, which the cartel said would depend on market conditions, started something of a stampede among oil traders, with prices plunging by over $3 at the start of the week. Later, the benchmarks got some respite after Saudi and Russian officials clarified that the return of supply is not something guaranteed.

Speaking at the Saint Petersburg Economic Forum, Saudi Energy Minister Abdulaziz bin Salman and Russia's Deputy Prime Minister Alexander Novak both said that nothing is set in stone and OPEC+ will use the market as guide for the right next step.

Bin Salman meanwhile took the opportunity to slam Goldman Sachs for its bearish outlook on oil prices. 

"I've counted that, in the two pages, seven times they mentioned bearish, bearish, bearish. Worse, technically worse and professionally worse, they have put numbers that are wrong," the Saudi official said, commenting on a report that the bank published right after the OPEC+ meeting, titled "Bearish phase out of extra voluntary cuts".

Unlike Goldman, JP Morgan suggested, following the OPEC+ announcement, that it should have much of a bearish effect on prices since many OPEC+ members were already producing more than their quotas called form. Citi also brushed off the mention of supply return, saying it expected the cuts to be extended in full into next year, Bloomberg reported earlier today.

Meanwhile, Jarand Rystad from Rystad Energy told Reuters that "further cuts may be necessary as demand softens slightly while the supply remains sufficient unless adjustments are made".

On the other hand, prices this week got some support from the European Central Bank, which announced a rate cut-the first in five years-on Thursday. Many market players apparently expect the Fed to follow suit despite multiple signs pointing to the contrary.

By Irina Slav for Oilprice.com

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