The fifth positive week in a row for oil.. OPEC meeting had a key role

The fifth positive week in a row for oil

The fifth positive week in a row for oil.. OPEC meeting had a key role

The fifth positive week in a row for oil.. OPEC meeting had a key role: World oil prices rose to their highest level since October 2018 at the June 25 session.

As such, both standards rose for the fifth week in a row amid expectations that demand growth will surpass supply in the coming period.

In addition, the market also expects the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers (also known as the OPEC+ group) to be more cautious in continuing to increase production from August.

Brent crude futures rose 62 cents (or 0.8%) to $76.18 a barrel, while U.S. light crude (WTI) rose 75 cents (1%) to $74.05 a barrel.

This is the highest closure for both benchmarks since October 2018.

Oil performance in a week

Overall, the global oil market continued to have a “great” week with 4 sessions of gains and one slightly diminished session.

With the opening of the new week on June 21, world oil prices rose by about 2% as talks on ending US sanctions on Iran stalled and the dollar slipped from its highest level in two months.

In addition, oil prices have also recovered against the backdrop of expectations of limited growth in U.S. oil production,
making OPEC more likely to dominate the market in the short term before shale production increases sharply.

World oil prices declined

World oil prices declined slightly on June 22 after Brent crude rose above $75 per barrel for the first time in more than two years.

OPEC + sources said on the same day that the group was discussing gradually increasing oil production from August 2021, but had not yet decided on the exact amount.

OPEC + is returning 2.1 million barrels of oil to the market every day from May to July 2021,
as part of a plan to phase out last year’s production reduction agreement as the COVID-19 pandemic hit the market.

On June 23, the price of Brent oil rose above $76 per barrel and at the highest level since the end of 2018,
after data showed a fall in U.S. crude inventories as travel activity increased.

World oil prices

World oil prices traded on June 24 near their highest level in nearly three years,
following reports of U.S. oil inventories falling to their lowest level since March 2020 and an increase in German economic activity.

Concerns about the future of the Iranian nuclear agreement, which could end U.S. sanctions on Iranian oil exports,
have also helped boost energy markets.

With gains of about 1% in the last session of the week of June 25, both benchmarks gained over 3% for the entire week.

According to analysts, crude oil prices rose due to improved demand expectations, as well as expectations that the market will continue to tighten as OPEC + is likely not to increase production sharply at the next meeting.

Upcoming OPEC meeting

OPEC + meeting had a key role on July 1 to discuss the further easing of production cuts from August 2021.

According to experts, OPEC has considerable scope to boost supply without a significant impact on oil stocks,
amid expectations of a more rebounding demand.

In terms of demand, the main factors that OPEC + has to take into account are the strong growth momentum in the United States, Europe, and China thanks to the deployment of the COVID-19 vaccine and the reopening of economies.


Analysts say these factors have partially offset the rise in new COVID-19 cases in many other places
and affected gasoline demand in those areas.

In addition, the U.S. is less likely to lift sanctions on Iran and help it increase its oil supply.

A United States official said that the two sides still had serious contentions on a range of issues regarding Tehran’s compliance with the 2015 nuclear agreement.

Impact of pandemic decline

The decline of the pandemic and the resumption of the world economy have led to increased demand for crude oil, gasoline, diesel, and kerosene.

According to the French Federation, the coexistence of the tourism industry is one of the factors driving prices up.

A current risk factor for the economy is the delta mutation of the coronavirus, where it could lead to a return of closure.

Higher prices could boost shale oil producers.

The U.S. hydraulic fracking industry has long been a correction of the commodity market and has expanded production as prices rose. 

The last time we have witnessed this was in 2014.

At the time, oil had reached $100 a barrel, and U.S. hydraulic fracking companies had a quick end to the market.

Iran is the risk factor

OPEC countries, led by Saudi Arabia and Russia, can benefit from climate policy in the West.

It’s clear that if they are willing to interact with increased production in response to the increased demand.

 Following the election of the conservative cleric Ebrahim Raisi as President of Iran, there are few possibilities that the country will move in a direction that will lead to the swift abolition of U.S. sanctions.

The decline in the number of US oil rigs

The number of oil exploration rigs, which is an indicator of the outlook for the oil industry and the production of short-term crude oil in the U.S., fell by 1 this week.

According to weekly data released by the oil field service company Baker Hughes,
the number of oil rigs in the United States fell by one to 372 per week from 19 to 25 June, compared to the previous week.

The number of oil rigs in the country increased by 188 last year.


The fifth positive week in a row for oil

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