Crude Oil Update: Brent Propped Up by Uneventful Biden Trip and Uncertainty Around Nord Stream

[MongiIG]

Jul 18, 2022 | DailyFX
Warren Venketas, Analyst

BRENT CRUDE OIL (LCOC1) TALKING POINTS

• Bidens leaves Middle East without increased supply result.
• Russia’s political situation could see Nord Stream pipeline remain closed come Thursday.

BRENT CRUDE OIL FUNDAMENTAL BACKDROP

Brent crude oil extended last weeks Friday’s positive close in early trading on Monday morning after U.S. President Joe Biden’s visit to Saudi Arabia failed to deliver anything concrete. The trip was aimed at coaxing the Saudi’s to increase oil production thus easing inflation pressures. The response from the Saudi’s and other key officials reiterated the fact that production scheduling and/or increases remain with the OPEC+ consortium leaving President Biden without a deal. This being said, the upcoming OPEC+ meeting on August 3, 2022 could see a revision in the production outlook but with OPEC+ currently struggling to meet quota’s it is difficult to see how a higher figure could be met. Existing tight crude oil conditions are likely to endure acting as a support for elevated crude prices.

Later this week (Thursday), the expected reuse of the Nord Stream 1 pipeline will be under the spotlight. If Russia does not bring the pipeline back online as anticipated, we could see energy prices soar as markets concerns around and energy crisis grows. The political uncertainty is a positive for brent crude prices for now but the demand-side fears from an indeterminate Chinese economy, global recession doubts and a strong U.S. dollar are keeping crude under control.