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Market News Asian demand is gradually returning + OPEC's production increase is not strong, the road to oil price rise is not over yet!
Asian demand is gradually returning + OPEC's production increase is not strong, the road to oil price rise is not over yet!
Analysts are becoming more optimistic as the return of Asian demand hangs over the oil market, energy website Oilprice analyst Irina Slav wrote on June 13. Gasoline prices have reached their highest level ever and show no signs of slowing the rebound. In an effort to cool the rally in oil prices, OPEC+ increased its production quotas, a move that has sparked renewed concerns about falling spare capacity.
2022-06-14
9061
On June 13, market analyst Irina Slav wrote that Brent oil is currently trading around $120, and with Asian demand recovering, oil prices are unlikely to fall further sharply. According to the UAE's energy minister, oil prices have not even peaked, or are close to them.
Gary Ross, manager of hedge fund Black Gold Investors, said last week: "I have never seen this in my career over the past 50 years. The world has little spare capacity, economies outside Asia are strong, and Asia is The economy is recovering now, and we are in a period of global oil supply disruption."
Shrinking spare capacity around the world has recently come into focus after OPEC+ decided to raise output targets for July and August to quell fears of runaway energy inflation. However, as only a few OPEC+ members have spare capacity to effectively boost production. They may be reluctant to tap spare capacity, according to analysts, as that would further reduce the buffer of available capacity, leaving producers less flexibility in the event of production disruptions, such as those often seen in Libya.
Meanwhile, oil demand remains strong, providing the potential for further gains in oil prices, with industry watchers and analysts expecting a sharp rise in oil prices before oil levels begin to weigh on demand.
UAE Energy Minister Suhail Al-Mazrouei hinted last week that at the current pace of consumption, oil demand is far from peak as Asian demand has not fully recovered.
Subsidies introduced by many governments to curb soaring energy prices have been criticized by many on the grounds that instead of preventing more oil use, subsidies encourage more use, helping to keep prices up.
Meanwhile, the latest update on OPEC+ production has not been particularly encouraging. OPEC output again fell well short of its target in May, with OPEC alone producing 2.7 million barrels a day less than the April deal, a Platts survey showed. Nigeria's output is at its lowest level since the Platts survey, and Libya just said it was down 1.1 million barrels a day due to the ongoing fighting.
JPMorgan expects that only a few OPEC+ members have spare capacity, and expects OPEC+ production to increase by about 160,000 barrels per day in July and 170,000 barrels in August. This adds to the grim prospect of higher oil prices due to increased travel demand in the northern hemisphere during the summer.
(Daily chart of Brent crude oil main contract)
At 11:21 GMT+8 on June 14, the price of the main Brent crude oil contract was reported at $122.54 per barrel.
Gary Ross, manager of hedge fund Black Gold Investors, said last week: "I have never seen this in my career over the past 50 years. The world has little spare capacity, economies outside Asia are strong, and Asia is The economy is recovering now, and we are in a period of global oil supply disruption."
Shrinking spare capacity around the world has recently come into focus after OPEC+ decided to raise output targets for July and August to quell fears of runaway energy inflation. However, as only a few OPEC+ members have spare capacity to effectively boost production. They may be reluctant to tap spare capacity, according to analysts, as that would further reduce the buffer of available capacity, leaving producers less flexibility in the event of production disruptions, such as those often seen in Libya.
Meanwhile, oil demand remains strong, providing the potential for further gains in oil prices, with industry watchers and analysts expecting a sharp rise in oil prices before oil levels begin to weigh on demand.
UAE Energy Minister Suhail Al-Mazrouei hinted last week that at the current pace of consumption, oil demand is far from peak as Asian demand has not fully recovered.
Subsidies introduced by many governments to curb soaring energy prices have been criticized by many on the grounds that instead of preventing more oil use, subsidies encourage more use, helping to keep prices up.
Meanwhile, the latest update on OPEC+ production has not been particularly encouraging. OPEC output again fell well short of its target in May, with OPEC alone producing 2.7 million barrels a day less than the April deal, a Platts survey showed. Nigeria's output is at its lowest level since the Platts survey, and Libya just said it was down 1.1 million barrels a day due to the ongoing fighting.
JPMorgan expects that only a few OPEC+ members have spare capacity, and expects OPEC+ production to increase by about 160,000 barrels per day in July and 170,000 barrels in August. This adds to the grim prospect of higher oil prices due to increased travel demand in the northern hemisphere during the summer.
(Daily chart of Brent crude oil main contract)
At 11:21 GMT+8 on June 14, the price of the main Brent crude oil contract was reported at $122.54 per barrel.
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