Oil Prices rose for a fifth week last week as fuel demand rebounded on strong economic growth and increased travel during summer in the northern hemisphere. The global crude supplies remained snug as the Organization of the Petroleum Exporting Countries and their allies maintained production cuts.
The producer group, known as OPEC+, is returning 2.1 million barrels per day to the market from May through July as part of a plan to unwind last year’s record Oil output curbs. OPEC+ meets on July 1 and could further ease supply cuts in August as Oil Prices rise on-demand recovery. Howie Lee, the economist at Singapore’s OCBC Bank, said that the demand recovery has surprised everyone and OPEC needs to respond.He also added that there is some leeway for easing supply curbs given how high prices are, and we might see a 250,000 BPD increase from August.ANZ and ING expect OPEC+ to increase output by 500,000 BPD in August, which is likely to support higher prices.
One Singapore-based analyst said Oil Prices are unlikely to see a big correction unless OPEC increases supplies by 1 million BPD or more. Negotiations over the revival of Iran’s nuclear deal are expected to resume in the coming days. A monitoring agreement between Tehran and the U.N. nuclear watchdog lapsed last week.
A weaker U.S. dollar and a reversal of risk appetite in global markets also supported dollar-denominated commodity prices. The United States added 13 Oil and gas rigs in June, up for the 11th month in a row along with higher prices, although it was the smallest monthly increase since September 2020, Baker Hughes data showed on Friday.