Strong summer demand supports higher oil prices

Crude oil prices started the week’s trading on a rise due to strong demand during the summer, in addition to the stalled negotiations of the nuclear agreement in Vienna, making it difficult for Iranian oil supplies to return to the market.
Prices also receive broader support from the spread of Corona vaccines, the recovery of the driving season and summer trips in the United States and the world, in addition to the continued restrictions of producers on global oil supply, whether in the “OPEC +” alliance or American producers.
He told Al-Eqtisadiah, oil analysts, that the market is still evaluating the ongoing recovery in global demand for oil with the decline of the previous concern about the renewed abundance of supply, but the price gains are curbed by the continued rise of the US dollar, which is related to an inverse relationship with crude oil prices.
The specialists pointed out the renewed talk in the market about the expectations of the price of crude oil recording a value of $100 per barrel in the coming years due to an expected supply deficit that will appear by 2025 as a result of climate policy pressures and low investments in the new supply in exchange for the increasing global demand for oil.
Robert Stehrer, Director of the Vienna International Institute for Economic Studies, stressed that the rise in prices derives its strength mainly from the high rates of vaccination and the easing of restrictions on movement in most countries of the world, especially in the United States and Europe, which are leading this remarkable economic recovery.
He pointed out that there are good signs of recovery and improvement in demand for fuel and refining products in India, as fears of the pandemic have relatively receded and the country has resorted to easing closure restrictions in many parts of India, in response to the continuing downward trend in new Corona injuries, especially the Indian boom, This led to an increase in sales of the two most used road fuels in the country (gasoline and diesel) by 13 percent during the first half of June compared to the same period last month.
For his part, Rudolf Huber, a researcher in energy affairs and director of a specialized website, said that the ceiling of ambitions for price gains is expanding, especially after oil prices rose to above $70 a barrel, and expectations were issued for American investment banks that bet on the proximity of reaching the $100 a barrel level in the future. perspective.
He stated that the continuation of the recovery of demand currently in return for the supply remaining scarce supports oil prices, and reinforces expectations that there is an opportunity for oil in the markets to reach $ 100 a barrel again and for the first time since 2014 – which witnessed a widespread collapse in the second half of it – but this very high level is not Possible in the short term, stressing that consumer pressures will contribute to the return of more supplies of crude oil to the market in the coming months to calm the sharp rise in prices.
For his part, Matthew Johnson, an analyst at the international consulting company Occera, explained that price gains have become a strong dominant feature on the market, despite the persistence of adverse factors such as the rise of the dollar and new infections in the epidemic, pointing to the importance of optimistic supportive expectations from Goldman Sachs, which suggest that Global demand for crude oil is making the biggest jump ever over the next six months.
He added that expectations also indicate that global oil consumption is likely to reach almost pre-epidemic levels in the last quarter of this year, and that demand in 2019 will exceed through 2022, setting a new record for annual global demand for crude oil.
In turn, Naila Hengstler, director of the Middle East Department at the Austrian Federal Chamber, said that the “OPEC +” alliance is carrying out a resolute process of controlling a large part of global crude oil supplies.
She pointed to the importance of data issued by Wood Mackenzie International that the successive price gains of crude oil would raise OPEC’s revenues close to 2019 levels with a volume less than 10%, indicating that the “OPEC +” group always carefully studies market developments, Extremely high oil prices are slowing down the global economic recovery and stimulating non-OPEC production, which could lead to an increase in supply next year.
With regard to prices, oil rose yesterday, supported by strong summer demand and a pause in talks to revive the nuclear agreement, which may indicate a delay in the resumption of supplies to Iran, a member of “OPEC”.
According to “Reuters”, by 06:22 GMT, Brent crude for August delivery was up 23 cents, or 0.3 percent, to $73.74 a barrel. US West Texas Intermediate crude for July delivery recorded $71.94, an increase of 30 cents, or 0.4 percent.
Both benchmarks have risen over the last four weeks amid optimism about the pace of global vaccination and an improvement in summer travel. The recovery lifted premiums for spot crude in Asia and Europe to their highest levels in several months.
“The recovery in demand in the northern hemisphere summer is strong, adding to market concerns about further sharp declines in inventories,” ANZ analysts wrote in a note.
While Jeffrey Halley, an analyst at OANDA, said, “The core of the present demand picture for oil is still positive…Despite the noise in the financial markets, the real world is on the right track and will need increasing amounts of energy with the reopening.”
While Bjarne Schieldrop, senior commodity market analyst at SEP, said it is likely to delay the return of Iranian oil to the market, but it is unlikely that the agreement train will derail.
On the other hand, the “OPEC” crude basket declined, and its price reached $71.56 a barrel last Friday, compared to $72.29 a barrel the day before.
The daily report of the Organization of Petroleum Exporting Countries (OPEC) said yesterday that the price of the basket, which includes average prices of 13 crudes from the production of member countries of the organization, achieved its second decline in a row, and that the basket almost stabilized at the level of last week, which recorded 71.31 dollars per barrel.

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