Crude oil’s remarkable recovery continues. With WTI piercing US$70/bbl, the chatter of $100 oil has picked up steam. Moreover, the surge in prices should make things easier for OPEC+ at its Ministerial Meeting on Dominion Day , when it’ll choose its production cut strategy from August onwards, Art Woo, Senior Economist and Director Economics at the Bank of Montreal, reports.
The magical $60 number – critical to catalyze new incremental production – has likely risen
“Beyond higher-than-expected prices, we expect another key development that’s working in OPEC+’s favour is that the incontrovertible fact that the recovery in US petroleum production has remained muted so far .”
“We wonder if OPEC+ would be truly comfortable letting petroleum prices run significantly higher despite the apparent economic benefits of greater export dollars and monetary revenues. Indeed, petroleum prices, if sustained, have already reached levels that might push many key OPEC+ members’ budgets back to surplus.”