Oil Set for Weekly Gain as Focus Turns to Upcoming OPEC+ Meeting

Crude oil on oilfield pipework in Russia. (Photographer: Andrey Rudakov/Bloomberg)

Oil Set for Weekly Gain as Focus Turns to Upcoming OPEC+ Meeting


Oil posted its fifth straight weekly gain, the longest winning streak since December, as demand recovers and supplies continue tighten in the U.S. and China.

Futures in New York rose 3.4% this week to the highest level since October 2018. Demand continues to rebound while the market expects output will only get a modest increase from the OPEC+ alliance, which meets next week to discuss supply policy.

“It’s very unlikely, at least from my perspective, that they are going to go flood the market with crude, open up all the spigots and collapse the price,” said Bart Melek, head of commodity strategy at TD Securities.

Oil Set for Weekly Gain as Focus Turns to Upcoming OPEC+ Meeting

Stockpiles are draining rapidly as fuel consumption rebounds in key regions including the U.S. and Europe. At the same time, the prospect of an imminent surge of Iranian oil is diminishing as talks to revive a nuclear deal drag on. The increasingly bullish picture is helping to fan speculation that Brent may eventually return to $100 a barrel.

JPMorgan Chase & Co. increased an estimate for 2021 global demand for crude by 200,000 barrels per day, with the majority of that gain coming from China. U.S. demand would stay strong until September, the report said.

Gasoline futures fell Friday after the Supreme Court announced Friday that the Environmental Protection Agency has wide latitude to exempt refineries from federal mandates that they mix renewable fuels into gasoline and diesel. The decision marks a victory for oil companies that have sought a break from the requirements, arguing that costs have skyrocketed in the recent months.

“It’s the same theme that we’ve been showing the past several weeks: no real relief on the supply front and strong demand,” said John Kilduff, a partner at Again Capital LLC.

  • West Texas Intermediate for August delivery rose 75 cents to settle at $74.05 a barrel on the New York Mercantile Exchange.
  • Brent for August settlement rose 62 cents to end session at $76.18 on the ICE Futures Europe exchange.

The world’s third-biggest oil consumer India has called for an increase in output from OPEC and its allies, saying high crude prices are adding to inflationary pressure. India’s transport fuel demand is expected to grow in double digits next year, according to Icra Ltd.

Though Saudi Arabia has said the group has a role in “containing” inflation, it has signaled they will move cautiously, as the market remains fragile. The average gain forecast by analysts stood at 550,000 barrels a day -- barely a quarter of the global supply deficit that the alliance anticipates during August.

Other market news:
  • California road use is gradually moving toward pre-pandemic levels since the state lifted its Covid restrictions on June 11.
  • The accelerating shift to cleaner energy poses a challenge for global oil demand in the next decade, according to a Bloomberg Intelligence survey, but responses were divided as to whether consumption will return to pre-pandemic highs.
  • The House voted Friday to rescind a Trump-era rule blocking the EPA from directly limiting oil industry emissions of the powerful greenhouse gas methane, a move that would restore requirements imposed by the Obama administration while freeing the agency to craft new more stringent rules for the oil and gas industry.

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