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US weekly oil inventories -6718K vs -4686K

  
Analysis, Crude

Weekly oil inventory data

  • Prior was -7614K
  • Gasoline +1522K vs -886K
  • Distillates -869K vs +486K
  • Refinery utilization +0.7% vs +0.5% exp
API data from late yesterday:

  • Crude -8153K
  • Gasoline +2418K
  • Distillates +428K
  • Cushing -1318K
WTI was trading at $73.73 just before the report and is slightly lower afterwards. The headline is a bit lighter than API data but the gasoline and distillates numbers are more bullish. There are no big surprises here and the market will get right back to focusing on tomorrow’s OPEC+ meeting.
oil chart

OPEC oil output said to have risen by 740k bpd in June

  
Analysis, Crude

According to a survey by Reuters

OPEC
  • OPEC output in June rises by 740k bpd to 26.24 million bpd
  • Compliance with OPEC+ seen at 115%
This isn’t so much so a surprise as they are pumping more amid improving demand conditions, with output having risen in every month sine June 2020 (besides February).
Of note, Saudi Arabia is surveyed to post the largest output gain this month but even so, the group is still pumping less than what is proposed by the latest accord – as seen with the compliance levels; though it did drop from 122% in May.
Oil is keeping steadier today, up 1% to $73.72 ahead of the OPEC+ meeting tomorrow where the bloc is likely to play it safe and announce a 500k bpd increase in output. Risks are to the upside (in terms of output) on the announcement so just be wary.

OPEC monitoring committee meeting delayed until Thursday in schedule reshuffle

  
Analysis, Crude

Could mean that the main meeting will be pushed back

Could mean that the main meeting will be pushed back
The OPEC+ JMMC monitoring committee meeting has been pushed back from tomorrow until Thursday at 1530 Vienna time.
That meeting usually sets the stage for OPEC itself and its recommendations often form the backbone of what OPEC does, or at least sets the negotiating parameters.
This time though it will be wedged in between the OPEC meeting and the OPEC+ meeting. This is the new schedule, according to Amena Bakr from Energy Intel.
  • Opec meeting at 13:00 Vienna time
  • JMMC at 15:30
  • Opec plus meeting at 17:00
The lack of time between them sounds to me like everything is decided. The leak last week was a 500k bpd increase in August. I would expect upside risks but OPEC might want to play it safe and keep supply tight until there is some clarity on Iran’s barrels.

OPEC+ JTC keeps 2021 global oil demand growth at 6 million barrels per day

  
Analysis, Crude

Meeting ends

The OPEC+ JTC meeting has ended with no policy recommendations. This according to OPEC+ sources.
The sources also report that OPEC+ JTC keeps 2021 global oil demand growth that 6 million barrels per day.
The price of WTI crude oil futures is trading back below its 100 hour moving average at $73.31.  The next target comes in at the 200 hour moving average at $72.71.
In trading today, the sellers tried to push the price below the 200 hour moving average, only to find support buyers against day lower channel trendline. More recently the traders took the price above the 100 hour moving average only to fail on that break higher.

Ahead of the OPEC+ meeting on July 1 – renewed lockdowns to weigh on demand

  
Analysis, Crude
Noting in there that:
  • Caution is also warranted given the nature of the demand recovery, which is subject to setbacks if COVID-19 outbreaks should once again rise, the ‘Delta’ variant is of particular concerns as it seems more transmissible. 
Here are just a few countries that have introduced a renewed round of lockdowns that’ll limit the growth of demand. Restrictions tightened in parts of:
  • Asia
  • Australia
  • Russia
  • South Africa
(there are more). Also note that in Europe, Spain and Portugal have imposed new restrictions on UK visitors. Hong Kong has done similar.
Still, analysts do expect OPEC+ to hike output (see post linked above for more).
I posted earlier on :  Oil - OPEC+ July 1 meeting is expected to result in an increase to output

Oil – OPEC+ July 1 meeting is expected to result in an increase to output

  
Analysis, Crude

TD have a note out on what they expect from this week’s OPEC-plus meeting (if you think of OPEC+ as Suadi + Russia you won’t be too far off the mark).

  • With the OPEC+ production increases running their course in July, this week’s meeting is garnering plenty of attention as to what the next steps will be for the cartel
  • We expect the cartel will increase production once again but will ultimately maintain a cautious approach that may only satisfy a portion of the expected deficits this summer
Huh. A ‘cautious’ approach like this makes sense if producers want to keep prices at these sorts of high levels. Caution is also warranted given the nature of the demand recovery, which is subject to setbacks if COVID-19 outbreaks should once again rise, the ‘Delta’ variant is of particular concerns as it seems more transmissible.
Central estimates for the supply increase are circa +0.5m bbls/day, the fresh output kicking in from August.
TD have a note out on what they expect from this week's OPEC-plus meeting (if you think of OPEC+ as Suadi + Russia you won't be too far off the mark).

Oil upside continues with OPEC+ in focus this week

  
Analysis, Crude

Oil is holding steady, up 0.2% on the day

Oil
There hasn’t been much to really thwart the momentum in oil and I don’t see the OPEC+ decision this week being a major game changer whatsoever.
The consensus is largely that OPEC+ will step up production by 500k bpd but there is a slight chance they may go for more. That might upset oil bulls a little but it won’t deter them from the bigger picture and the continued rally in oil surely.
With the market so focused on inflation and with the ongoing view that demand conditions are likely to keep more robust going into 2H 2021 as well as 2022 as the world economy picks up, it is tough to fight the universal call that oil prices are headed upwards.
The July and October 2018 highs at around $75-76 will pose the next challenge but that may be a mere pit stop before the next leg higher in oil should this landscape maintain.

Oil – OPEC+ meeting next week, demand is strong but there is fragility

  
Analysis, Crude

Via ANZ, a good overview of oil heading into the OPEC+ meeting July 1:

  • group … reviews its production agreement
  • Increased travel and strong economic growth is likely to see the recovery in demand accelerate. This will tighten the oil market. 
  • However, the situation is fragile amid sudden outbreaks of COVID and the possibility of rising supply from a variety of sources. 
  • The market is calling out for more crude oil, while others are concerned about the inflationary impact of higher prices. 

Oil at $100?

  
Analysis, Crude

Growing voices for higher oil

Some reasons for oil to remain bullish as follows. Eamonn has been well on this all week.
  • India sales have rebounded in 1h of June
  • US/Iran deal not progressing well
  • COVID-19 vaccines are going well – less of a link between infections and hospitalisations/deaths
  • Lack of supply noted
  • Inventories keep falling – another private inventory last night
  • Market shrugs off OPEC+ sources looking to increase supply from August
Reasonable to expect intraday buyers at $71.50 with stops below support
Growing voices for higher oil
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