China Renewable Energy Policies Put Oil Market at Risk
China Renewable Energy Policies Put Oil Market at Risk
OPEC
and allies led by Russia postponed the meeting to Dec. 3 amid severe
divisions. As of the writing time, the meeting remains inconclusive. The
meeting aims to discuss a delay of 2-3 months to the production cuts
set previously. Since oil prices soared before the meeting, some member
countries called for a quick return to pre-cut oil production. They
worried that further upsides would encourage the US shale production,
which in turn would hamper oil. However, some other members threatened
an exit to extend production cuts. These severe divisions forced a delay
to the meeting.To get more news about WikiFX, you can visit wikifx official website.
OPEC+ holds a fifty-fifty chance of achieving consensus in the
meeting. Oil markets would receive substantial risks if the disagreement
lasted till the end of the meeting, said some major banks. In late
March and early April, oil prices crashed to -$40 as Saudi Arabia
offered sales due to its split with Russia. Markets fear that Saudi
Arabia will coerce members by repeating the tactics if no agreement is
reached this time. From my point of view, however, an extended
production cut will not be the reason to be optimistic about oil prices.
The soaring oil amid the worsening pandemic globally, which brings the
economic recovery and drives the aviation and tourism industry back to
normal, is early speculation on the soon available vaccination. Im
afraid an anti-climax will occur when the US and European countries
launch vaccine inoculations. Most pessimistic of all, China and the US
announced with one voice that they would accept aggressive policies of
environment and renewable energy to achieve carbon neutrality by
2050-2060. They both encourage the alternative of renewable energy that
is environmentally friendly to traditional carbon-emitting energy, which
I believe will significantly reduce future demand for crude oil.
Such a trend is evident in the spiking stock prices of the recent
US-listed companies that produce electric vehicles or solar energy. In
terms of oil prices, speculation on the two countries aggressive
environmental policies has not yet. It seems traders are waiting for
markets to price in positives from vaccination and OPEC+ meeting before
they go short with oil. Since WTI has seen initial resistance at $46.26,
the $49.42-$50 area will be on the radar, where a breach above due to
the positives will attract tradings from bears.
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