Americas News
Oil Marks Fifth Straight Week Of Gains As Analysts Focus On OPEC Meeting
Recent stockpile draws, continued economic improvement, the Organization of the Petroleum Exporting Countries (OPEC) keeping a lid on output, and the sense that the pandemic is behind us despite media scare headlines: these are the factors driving the remarkable recovery in oil prices, which on Friday were on track for a fifth straight week of gains.
Brent rose 18 cents to $75.74 per barrel, heading for a 2.9 percent weekly rise; West Texas Intermediate rose 29 cents to $73.59 per barrel, on track for a 2.6 percent weekly gain.
Giovanni Staunovo, analyst at UBS, said, "With larger oil inventory declines ahead, we expect oil prices to keep moving higher during 3Q21."
Some critics have suggested that depending on the outcome of an OPEC meeting next week, crude's gains could be interrupted: the cartel and its allies meet on July 1 to discuss further easing of their output cuts from August.
However, Stephen Brennock, analyst at PVM, suggested that "The producer group has ample space to boost supply without derailing the drawdown in oil stocks, given the rosier demand outlook."
It fell upon John Kemp, commodities analyst at Reuters, to detail just how remarkable oil's comeback has been: on Friday he wrote, "Global consumption will have bounced back in less than two years, after falling by almost 20 percent or 20 million barrels per day at the worst point of the epidemic and lockdowns in April 2020.
"The remarkable recovery in economic activity and oil consumption is mostly the result of a rapid deployment of effective vaccines in Europe and North America and strict quarantine controls in China and other parts of Asia."
Still, Kemp added that the strong rebound notwithstanding, "global consumption is still expected to be more than 2 percent or 2 million bpd below its pre-epidemic trend at the end of 2022........in effect, the epidemic will have cost the oil industry about 30 months of ordinary output growth, which must be offset by lower prices to stimulate consumption and restrain production, or deliberate restraint by OPEC+, U.S. shale firms and other producers."
But as always with crude, all manner of monkeywrenches could derail analytical expectations, the most obvious one being Iran's possible return to the global community; although experts say the country reaching a nuclear agreement with the U.S. won't happen any time soon, Amrita Sen, chief oil analyst at Energy Aspects, says the return of Iranian oil to world markets will likely happen in the fourth quarter of this year.
As for the hotly debated issue on when demand will ultimately peak, a Bloomberg Intelligence survey on Friday showed that about 39 percent of respondents see demand slightly above the pre-Covid level of 100 million bpd in 2030, while 30 percent expect consumption to fall short of that mark.
