“Prices could reach $90 in two months if the US continues with inflation and low growth and China is unable to find solutions to its economic problems. Economic woes in these two countries can affect demand Arun Kumar said. At the same time, however, Kumar suggested that oil demand could find support from record natural gas prices, which are pushing industrial consumers to switch to oil production. Indeed, the German city of Munich last week restarted oil-burning units at two power plants in an effort to reduce natural gas consumption in line with the EC’s plan to cut natural gas consumption by 15 percent across the European Union . As of August 1, natural gas in Europe was trading above $199 per MWh, lower than the peak reached in March this year, but still prohibitively expensive for many gas consumers. Oil prices, meanwhile, have been pushed lower recently by economic worries as various analysts and politicians debate whether the US has entered a recession or whether the definition of a recession needs revision. Nobel laureate Paul Krugman suggested that the word “recession” was irrelevant. However, it appears to still be important to oil traders. Concern over the US and China was also the main reason for the latest drop in oil prices, along with anticipation of the OPEC+ meeting this week. The extended cartel met today in Vienna to discuss production for September. The group decided to slightly raise its production targets for September by 100,000 bpd. With a compliance rate of over 300%, OPEC+ is unlikely to achieve this goal. Meanwhile, “Russia’s production is unlikely to decline anytime soon and thus overall global oil supply will remain unaffected in the coming months,” the Bharat Petroleum chairman also noted. By Irina Slav for Oilprice.com More top reads from Oilprice.com:
