Despite the severe losses at the beginning of the sessions.. Oil ends the week at a rising edge
Despite the severe losses at the beginning of the sessions.. Oil ends the week at a rising edge:
Oil prices closed slightly higher on Friday, in a quiet market that strengthened its positions after a rough round trip at the beginning of the week,
with uncertainty between rising demand and concern over a delta-variant explosion of the coronavirus.
The barrel of Brent North Sea for September delivery, listed in London, ended the session slightly higher by 0.42%, or 31 cents, at $74.10.
In New York, West Texas Intermediate crude barrel for September delivery recorded limited gains of 0.22% or 16 cents to $72.07.
The two black gold market benchmarks ended the week slightly higher than the previous Friday,
but at the end of a week full of fluctuations and turns.
Oil is rising again at the end of the week’s sessions
Falling more than 8% and 9% respectively on Monday and part of the Tuesday sessions, weighed down by concerns about a delta variant outbreak,
Brent and WTI are starting to return to the position they were that ended on Friday.
According to some analysts: “We’ve overcome a lot of things this week,” also referring to an unexpected rise in U.S. crude inventories,
published on Wednesday, which ultimately did not affect prices.
He noted that the oil session had not been as good as the Wall Street session on Friday in the Green Zone.
This indicates that the market has already taken into account the expected high demand scenario, but again, all this could be threatened by Covid-19.
However, he expects the increase to continue at a moderate pace, supported by the OPEC and OPEC + partners meeting announced on Sunday,
as the planned increase in production by the organization will only be gradual and will extend over more than a year.
Why did oil prices rise?
Crude oil prices rose at the close of the weekend and prices continued to rise last week after a strong recovery from the sharp decline on Monday,
supported by expectations that supply would remain limited throughout the year.
The discipline observed in recent months by OPEC also seems to apply, at present,
to producer States that are not part of the expanded OPEC + alliance,
primarily the United States, whose production did not increase last week.
Oil performance in a week
Oil prices and other hazardous assets fell at the beginning of the week due to concerns about the impact
of a rise in delta-variant cases of Covid-19 in the United States,
Britain, Japan, and elsewhere on the economy and demand for crude oil.
Over the course of the week, Brent oil prices rose by 0.7% after falling for three weeks in a row.
West Texas Intermediate crude prices rose by 0.4% after falling in the last two weeks.
Both of these crude oil benchmarks fell by about 7% on Monday (18/7) and were below the US $70 per barrel.
However, oil has succeeded in offsetting those losses, with investors expecting demand
to remain strong and the market supported by falling oil inventories and high vaccination rates.
Banks and analysts oil forecasts
Many analysts have raised their forecasts for oil prices between now and the end of the year,
on the basis that increased vaccination rates would limit the impact of the variable delta virus.
“Demand concerns have proved excessive and this is why oil prices have recovered,” Commerzbank said in a note.
Despite the expansion of oil supply, the oil market will continue to experience a slight undersupply until the end of the year.”
Demand growth is expected to exceed supply after a Sunday’s agreement between OPEC + to add another 400 thousand barrels per day each month starting next August.
Analysts at ANZ Research said in a report that the market is beginning to feel that OPEC + gains will not be enough to maintain market balance and that inventories in the United States and across OECD countries will continue to decline.
U.S. crude stocks rose 2.1 million barrels last week, but inventories at the West Texas Intermediate Cushing,
Oklahoma, delivery points, are at their lowest since January 2020.
Baker Hughes Energy Services
Baker Hughes Energy Services said U.S. oil rigs rose seven to 387 last week, the highest level since April 2020.
However, the recovery in drilling is modest, given the willingness of manufacturers to save costs.
“We continue to believe that lower crude oil and distillate prices led by OPEC+ is a buying opportunity
and the Brent project will reach $100 a barrel next year with distillates also rising,” Bank of America said in a note.
Commonwealth Bank commodity analyst Vivek Dar believes oil prices will rise by the end of 2021 as demand for oil grows faster than supply.
The bank expects the price of Brent oil to rise to $85 per barrel in the fourth quarter of 2021.
The Bank of England Barclays
The Bank of England Barclays on July 22 raised its 2021 oil price forecast by $3-5 a barrel,
saying that oil inventories will continue to fall as economies recover.
According to Barclays, oil prices could rise to $100 a barrel in the coming months if OPEC+ is too slow to restore supplies
due to its relatively inflexible response to non-OPEC+ supplies.
However, the path to recovery in oil prices still faces many obstacles.
According to the US Centers for Disease Control and Prevention, the economy is going through “another pivotal moment”
with COVID-19 cases surging again and beds in some hospitals filled with patients.
Despite the severe losses at the beginning of the sessions.. Oil ends the week at a rising edge