Oil continues to rise for the fourth week in a row
Oil continues to rise for the fourth week in a row
Oil continues to rise for the fourth week in a row: Crude oil prices continued to rise last week,
in the week ending June 18, oil prices were on track to rise for the fourth week after OPEC expected limited growth in the U.S.
oil production this year despite the price hike.
An OPEC source told Reuters that OPEC officials get expectations of American production from industry experts.
This will give producer groups more power to manage the market before the potential rise in shale oil production in 2022.
Oil performance in a week
On Friday, the price of Brent crude futures for August 2021 rose by 0.6% and closed at the U.S. $73.51 a barrel.
Similarly, the West Texas Intermediate crude price for delivery in July 2021 also closed by 0.8% to the U.S. $71.64 a barrel.
Both benchmark oil prices posted weekly gains of about 1.1%.
“The oil market is rising as OPEC is skeptical that increasing U.S. oil production will be enough to change its price
support plans,” said Phil Flynn, chief analyst at Price Futures Group in Chicago.
Brent crude settled at its highest price last Wednesday since April 2019 and West Texas Intermediate closed at its highest level since October 2018.
Despite these gains, there are continuing concerns about the pandemic and the rising US dollar.
This makes the price of oil more expensive than other currencies.
Reuters sources said officials from the OPEC Economic Committee board and external sponsors
attended a meeting on Tuesday focused on U.S. production.
OPEC is hearing more about the 2021 and 2022 prospects at separate meetings on Thursday.
While there is general agreement on limited U.S. supply growth this year, industry sources said
the 2022 forecast ranges from a growth of 500 southland to 1.3 million barrels per day.
“The general feeling about shale oil is that it will return as prices rise,
said a source at one of the companies providing forecasts for OPEC.
The rise in oil prices led to a severe decline in U.S. energy companies.
The number of oil rigs, an early indicator of future production, rose for the eighth week in a row to 373,
the highest level since April 2020, according to energy services company Baker Hughes Co.
Iranian nuclear agreement
On Thursday, Iran’s chief negotiator indicated that the deal is imminent in talks between Tehran
and Washington on reviving the 2015 Iranian nuclear agreement, adding to the pressure on prices.
driving US crude oil prices higher
This dynamic is driving US crude oil prices higher.
It even raises the possibility that West Texas Intermediate could reach parity with global benchmark Brent, for the first time in five years.
At least 18 months ago, the oil market underwent a transformation during the pandemic.
The move has reportedly had an impact on US exports.
With no breach of the rules of capital discipline and the reopening of the world’s largest economy
to the West, U.S. refineries are calling for more barrels to be purchased locally, rather than allowed to export.
According to some analysts, “it is a function of accelerating U.S. demand.”
The West Texas Intermediate crude has an external attempt at parity with Brent, but not the base case.
The market recognizes that West Texas Intermediate crude needs to raise its price to reduce exports and encourage imports,
otherwise the regional balance will become very tight in the summer.
Refineries across the United States
Refineries across the United States are operating at their highest levels since before the pandemic as demand that resulted from reopening most of the economy returns.
Midwest fuel plants, which rely largely on Cushing, are processing crude to their highest levels since September 2019,
adding support to West Texas Intermediate crude.
Capital discipline from the shale array along with increased domestic demand helped ease stocks in Cushing,
Oklahoma, the delivery point for NYMEX futures.
Seasonal shares in Cushing are at their lowest level in three years.
The result is an increasing lag in the United States oil futures market, where spot oil prices are more expensive than futures.
This motivates traders to sell their oil now rather than keeping it for later.
Economic recovery supports prices again
The prospects for global economic recovery continue to strengthen, increasing expectations that the process of improving
oil consumption will accelerate, supporting oil prices, ending the trading week with a strong rise.
Reports from OPEC, EIA, and VPI released last week showed that demand for crude oil will increase sharply in the period ahead,
and is likely to explode when production, tourism, and aviation activities return strongly.
tourism activities will explode
It is expected that the demand for fuel consumption will continue to increase as the peak heat season and tourism season
in European countries and the United States approaches.
According to experts, tourism activities will explode because the demand for tourism and the budget in tourism
spending has been constrained for too long by the pandemic.
Recent positive economic data from production and consumption activities have also contributed to strengthening and increasing
expectations of improving global demand for fuel consumption, thereby continuing to support the world economy and rising oil prices.
Gasoline prices were also boosted by investors who believed that the Fed would continue to maintain the current lax monetary policy
and that governments and central banks of states would be able to take fiscal measures to support it.
With the recent developments in the crude oil market, many organizations and experts commented on the potential for demand
to exceed supply in the near future before establishing a balance in early 2022 when sources are added as new supplies to the market.
according to the European Union
On the other hand, according to the European Union, the prospects for oil supplies from Iran appear bleak when nuclear negotiations
between the United States, Iran and the relevant parties are completely “tense.”
In addition, OPEC + ‘s strict commitment to the production plan is also an important factor in rising oil prices.