Brent fourth consecutive monthly increase .. and a positive oil outlook


Brent fourth consecutive monthly increase .. and a positive oil outlook

Brent fourth consecutive monthly increase .. and a positive oil outlook:

After several corrections, world oil prices strengthened last week.

This is under tight oil supply, accompanied by considerable market optimism about the prospects for a recovery in the world economy.

On Friday (30/7/2021), the price of Brent oil was at $ 76.33 per barrel, 0.37% higher than the previous day.

Since Thursday (29/7/2021), the price of Brent oil has stabilized above the US $75 per barrel 

During the week, the price of Brent oil rose by 3.01%. 

In the meantime, the price of West Texas Intermediate crude rose by 0.45% to the US $73.95 per barrel on Friday.

For the week, the price of West Texas Intermediate crude rose by 2.61%.

Brent posts a fourth consecutive monthly gain

Oil prices rose on Friday, with Brent crude posting its fourth monthly gain.

This evolution reveals how the world’s economies adapt to the coronavirus pandemic and the uneven severity of the delta variant.

Rising oil prices are due to demand growing faster than supply and the expectation that the worldwide vaccination will mitigate the impact of the re-emergence of Covid-19 infection worldwide, although the delta variant has caused new waves.

Brent crude futures for September, which ended Friday, rose by 28 cents, or 0.37 percent, to $76.33 per barrel.

The most active future in October gained 31 cents at $75.41 per barrel.

While West Texas Intermediate crude futures rose by 33 cents or 0.75% or $73.95 per barrel.

Both crude benchmarks gained more than 2 percent over the course of the week,
while Brent rose by 1.6 percent in July, its fourth monthly increase in a row.

West Texas Intermediate hasn’t changed this month.

Even as cases of Coronavirus infection increase in the United States, across Asia, and parts of Europe like Spain,
analysts believe that high vaccination rates will limit the need for strict lockdowns like those that destroyed demand during the worst moment of the past epidemic. 

Carsten Fritsch, an analyst at Commerzbank, said: “The oil market no longer seems to consider the delta variable as a threat as it did early last week.”

He added: “The ongoing vaccination campaigns in industrialized countries inspire confidence
that any re-imposition of large-scale restrictions on movement will be prevented.”

Economies are becoming more resistant to Covid-19

Analysts are also pointing to a rapid recovery in gasoline consumption and industrial production in India,
following the disastrous increase in Covid-19 infections that hit its population earlier this year.

They see the country’s new scenario as a sign that economies are becoming more pandemic-resistant at the moment.

Oil prices will trade near $70 per barrel for the rest of the year,
supported by a global economic recovery and a slower-than-expected return of Iranian supplies.

An American report confirming the recovery of the economy 

The Price Futures Group for brokerage services provided a report on demand for petroleum products
in the United States in May by the US Energy Information Agency (EIA),
which showed further evidence of recovery in the US economy. 

The report stated: “It seems like the Covid- 19 never happened,” with demand almost returning to pre-pandemic levels.

Since the announcement of an agreement between OPEC and its partners in OPEC + in mid-July on a calculated increase in production,
no major producer seems to have sought to take advantage of high prices to flood the market.

So far, however, prices seem to have peaked near their highest levels in early July,
at $77.84 per Brent barrel and $76.98 per West Texas Intermediate crude amid doubts about the strength of the economic recovery.

The report noted that some countries that had so far been severely affected by the Delta variant,
such as the United Kingdom, recording a decline in new cases that had allayed some of the epidemic’s concerns. 

The fact that Fed President Jerome Powell noted that the Corporation did not expect the spread of the delta variable
to have a significant economic impact “appears to provide some support for the economy and the market,” which could push prices to new highs. 

US oil inventories are declining dramatically

US gasoline and crude oil inventories have declined sharply in the last week,
with Cushing crude stocks – the US crude distribution center – falling to their lowest level since January 2020, reflecting sharply higher demand. 

ANZ analysts note that US aviation fuel consumption has reached its highest level since March 2020.

The results of a Reuters survey showed that OPEC oil production rose in July to the highest level since April 2020,
as the group continued to ease the agreement to limit production.

Trade sources said that Saudi Arabia, the world’s largest oil exporter,
is expected to raise the price of oil ores sold to Asian customers in September. 

This is the second month in a row of increase, demonstrating optimism about the prospects for global oil demand,
especially in Asia, particularly China.

However, according to Reuters, oil prices will trade near $70 per barrel in the second half of the year,
supported by a global economic recovery and a slower-than-expected recovery in supplies from Iran. 

Reuters said that the strongest momentum will be limited by the novel coronavirus variants.

Brent fourth consecutive monthly increase .. and a positive oil outlook