After a dismal August jobs report, crude oil prices moved lower in the past week as speculation grew that the Federal Reserve would delay cutting stimulus.
The price of Brent crude, the global standard for oil, fell 0.6%, on Friday to $72.61 per barrel. Just 0.1% of Brent’s value was lost for the week.
Employers in August added 235,000 jobs, less than a third of the forecast 733,000, but the coronavirus pandemic continues to cause difficulties.
Only the improvement in the unemployment rate from July to August, which was 5.2%, gave Brent crude bulls a sense of solace.
As a result of the shockingly poor jobs growth, oil prices rose from their lows in anticipation of the Fed postponing stimulus tapering.
To support the economy, the Federal Reserve has been buying bonds and other assets worth $120 billion since the COVID-19 outbreak in March last year. During that time frame, the central bank kept interest rates close to zero.
Market observers expect OPEC’s policies to come into trouble as early as 2022, or even as soon as the end of the year if the coronavirus resurgence hits demand. Oil market forecasts were presented to the oil ministers ahead of the meeting on Sept. 1.
One of the most optimistic scenarios predicts that global oil demand could peak at 100 million barrels next year, less than a whisker away from the high point before the pandemic.
It will not be long before OPEC’s members will again have to think about cutting output rather than raising production unless oil demand continues to climb, or unless production outside the OPEC+ group continues to slump.
There will be a return to the old (and new) divisions and long, difficult meetings when that happens.
This article was originally posted on FX Empire