US & China Renewable Energy Policies Put Oil Market at Risk Zoey| Influencer Forex Analysis•Jasper

OPEC and allies led by Russia postponed the meeting 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.

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.