Oil prices corrected on Monday as Greek optimism added to the sentiment, while general trend remains to be driven by constantly lifted global supply of the black gold commodity.
Greek Prime Minister Alexis Tsipras informed on Sunday that the country’s government had new reform proposal for the second party in aid negotiations, bringing an optimism after a long period on non-progressive talks. European Commission already expressed its positive stance and welcomed this approach.
Despite these short-term oil price corrections, no general progress has been made on the demand side of the market, while supply is being elevated globally, spurred by the United States last year due to shale revolution and followed by Russia and the Organization of Petroleum Exporting Countries (OPEC), which presented themselves as not willing to lower their production.
Moreover, United States added a rig in Permian and Bakken basin, not helping the oil to recover from its losses, albeit last week saw lower rig output.
Nevertheless, we expect the increase in crude oil prices to be limited as the global output remains high, challenge among producers is monitors oil prices even more as before and any major increase could spur more added barrels per day from OPEC, Russia or the United States, all having capacities to take advantage of such created spaces.
Demand seems to be lagging with slow recovery in most of the countries including China, which is showing a constant slowdown in its expansion (nevertheless still expanding). Although such development is logical and acceleration could not be seen forever, China is facing major problem in regional indebtness.
The European Union remains optimistic about Greece but structural reforms are constantly being highlighted by the European Central Bank President Mario Draghi, who explained many times that without such approach we can not expect a major progress of economy.
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