Oil markets edge drag on drivers#

Product stocks are also set to fall as drivers frustrated by confinement and travel restrictions take to the road en masse. IEA’s current balances suggest third-quarter 2021 could see the largest crude oil stock draw in at least a decade. Refiners are ramping up quickly to meet higher demand. The overhang in global oil stocks that built up last year has already been worked off, with OECD industry stocks now well below historical averages,” IEA said.Ĭrude oil balances are expected to be especially tight.

In that case, oil markets will tighten significantly as demand rebounds from last year’s COVID-induced plunge. “The OPEC+ stalemate means that until a compromise can be reached, production quotas will remain at July’s levels. While the UAE supported part of the proposal to raise production, it objected to an extension beyond April, when the current deal expires, and insisted on a higher baseline from which cuts are calculated to better reflect its increased capacity. Most OPEC+ delegates tentatively agreed to raise output by around 400,000 b/d per month from August until the remaining 5.8 million b/d supply cuts are unwound, effectively extending the deal to the end of 2022. The uncertainty over the potential global impact of the COVID-19 Delta variant in the coming months is also tempering sentiment,” IEA said. At the same time, the possibility of a market share battle, even if remote, is hanging over markets, as is the potential for high fuel prices to stoke inflation and damage a fragile economic recovery.

“Oil prices reacted sharply to the OPEC+ impasse last week, eyeing the prospect of a deepening supply deficit if a deal cannot be reached. At the time of the report’s writing, Brent was near $75/bbl. World oil markets are on edge with OPEC+ negotiations to boost supply now in deadlock, the International Energy Agency said in its July issue Monthly Oil Market Report.Īfter initially surging to multi-year highs in early July, benchmark crude oil prices have since eased.

Oil markets edge drag on