Strong demand and supply will remain tight, and oil prices have risen for five consecutive weeks, setting a record for the longest consecutive rise in six months
On Friday (June 25) U.S. oil closed up US$0.75, or more than 1%, to close at US$74.05/barrel; Bulk Oil rose US$0.62, or 0.8%, to close at US$76.18/barrel; with the US and Europe When fuel consumption rebounds, oil inventories drop sharply, pushing oil prices up continuously.
On the demand side, the key factor OPEC+ will have to consider is the strong growth in the United States, Europe, and China, thanks to vaccination and economic restart. Analysts said that this was partially offset by the increase in new crown cases in other regions and the counterattack of the epidemic.
JPMorgan Chase raised its forecast for global crude oil demand in 2021 by 200,000 barrels per day. Most of the growth will come from China. The bank expects that US demand will remain strong until September.
All eyes are on OPEC+ formed by the Organization of Petroleum Exporting Countries (OPEC), Russia, and oil-producing allies. They will meet on July 1 to discuss further reductions in production from August.
Edward Moya, senior market analyst at OANDA, said that the reason for the increase in crude oil prices is the improved demand outlook and the expected market supply will remain tight, because OPEC+ may only slightly increase production at the ministerial meeting on July 1.
Bart Melek, head of commodity strategy at TD Securities, said that at least in my opinion, OPEC+ will not open all the valves to flood the market with crude oil, which will lead to the collapse of oil prices.
Analysts from ClearView Energy Partners LLC wrote in a report that if Iran fails to reach an agreement before July 1, we expect OPEC+ to resume its monthly quota and announce the August meeting at the meeting next week. The output increased moderately.
A U.S. official said that the two sides still have serious differences over a series of issues regarding Iran’s compliance with the 2015 nuclear agreement. Iran’s sanctions were lifted, and the prospects for more Iranian crude oil to flow into the market in the short term became bleak.
US Secretary of State Blinken said on Friday that the lack of a temporary agreement between the International Atomic Energy Agency (IAEA) and Iran to monitor its nuclear activities is a serious concern that has been communicated with Iran.
Due to the impasse in the Iranian nuclear negotiations, the possibility of Iranian oil entering the market in large quantities is reduced. Driven by the bullish macro background, the market expects that Brent crude oil may eventually rise to $100/poke.
According to data provided by energy services company Baker Hughes, the total number of oil rigs in the United States fell by one to 372 in the week ending June 25. Despite the decline this week, the total number of oil rigs increased by 13 in June, the 10th consecutive month of increase, the second quarter increased by 48, and the third consecutive quarter of increase.
An analyst at Gelber & Associates in Houston said: “As oil prices continue to soar, the number of rigs has also been dragged down,” noting that most of the growth is driven by oil rather than natural gas rigs.
Some energy companies plan to increase spending in 2021 after cutting drilling and completion spending in the past two years, although most companies focus on capital discipline and investor returns rather than expanding supply. However, driven by increased activity and rising oil prices, executives surveyed by the Dallas Federal Reserve Bank said that oil and gas producers have spent more money on projects and expect to increase this amount again next year.
(U.S. oil daily chart)