Oil achieves best half-year performance since 2009, looking towards OPEC+ meeting
Crude oil and Brent oil futures rose Wednesday, extending small gains for the previous day.
Prices made little progress after switching between gains and losses on Tuesday with differing opinion data for OPEC group and its allies.
Also after OPEC Secretary-General Mohamed Barkindo said on Tuesday that oil demand is expected to rise by 6 million barrels per day this year, with the arrival of 5 million barrels per day in the second half of 2021.
However, crude oil and Brent oil prices are settling near their highest levels in more than two years as U.S. inventory data and OPEC+’ decision are expected this week.
Crude oil and Brent oil near highest peak since 2018 as U.S. inventory data and OPEC+ decision await
Oil prices have risen by about 50% this year as major economies such as the UNITED States, the United Kingdom and China, backed by comprehensive vaccination campaigns, reopen.
Both benchmark crudes reached their highest levels since October 2018 this week, amid declining inventories and optimism about a recovery in fuel demand this summer.
But the recent spread of the Delta variant threatens to slow the rapid recovery of global demand, and the recovery could lead export-focused refineries in Asia to lower processing rates.
Oil is heading for its best half-year performance since 2009 as recovery from the epidemic boosts fuel consumption and reduces the market ahead of the key OPEC+meeting, which is expected to lead to an increase in supply.
Crude oil prices need to stabilize at 74.50 on a weekly basis, as we explained in our previous article, to target areas of $77 per barrel, but if they fail, they may return to test the $70 per barrel areas.
Oil prices achieve best annual performance in 12 years with rise of more than 50%
Meanwhile, oil is settling higher as OPEC+ministers split ahead of an important meeting later this week on production policy.
The alliance will be busy after delaying initial talks on the oil market to allow more time for members to resolve differences.
The disruption comes as the resurgence of the Delta strain of the Corona epidemic in some areas raises concerns about demand expectations.
Futures held on to gains in postmarket trading after the industry-funded American Petroleum Institute reported a drop in U.S. crude supplies by 8.153 million barrels in the week ended June 25.
U.S. crude oil inventories expected later in the day fell by 4.460 million barrels, the American Petroleum Institute data showed.
If those forecasts are confirmed, this will be the largest consecutive inventory decline since January, and if confirmed by U.S. government data, this will be the sixth consecutive week of inventory declines.
Market forecasts indicate u.s. crude oil inventories fall for the sixth week in a row
OPEC and its allies postponed preliminary talks between ministers by one day to allow more time for a compromise before a crucial meeting on Thursday, delegates said.
The 23-nation coalition was scheduled to hold its advisory body and the Joint Ministerial Monitoring Committee on Wednesday, but the meeting will be held on Thursday, the same day as the main policy meeting.
The Saudi-Led Coalition and Russia are considering whether to continue to revive more crude supplies as global demand recovers from the COV pandemic.
According to delegates, Moscow is considering a proposal to increase production, but Riyadh has indicated that it prefers a gradual approach.
With oil prices rising to their highest level in nearly two and a half years, analysts widely expect the group to take advantage of some of the enormous energy it closed last year.
The average forecast is an increase of 550 barrels per day, which is approximately 10% of the volume that remains idle.
As far as Riyadh’s position is concerned, it is not the first time that the two leaders have gone to the meeting with different positions, and they tend to reach a compromise where the same thing may happen this time.
In general, OPEC and its allies will seek a time-lapse compromise and an increase in production that does not keep oil prices stable at the moment as inflation grows, as well as as the growing Delta strain of the Corona epidemic in the European region of Asia. The choice opec+faces now is whether these gains should be consolidated, prices allowed to stabilize or prices allowed to rise further, which could draw growing consumer anger.
- Abdalhamid Maher – 30-06-2021