WTI unfazed around $74.50 after IEA says oil markets to tighten significantly if OPEC+ impasse continues

“Oil markets will tighten significantly if OPEC+ stalemate continues, the International Energy Agency (IEA) said in its latest monthly oil market report, adding that the “output quotas will stay at July levels.”

Key takeaways

OECD industry stocks rose by 18.1 mln barrels in May, 75.8 mln barrels below the 2016-2020 average to 2.945 bln barrels.

Preliminary June data for the US, Europe and Japan show industry stocks fell by 21.8 mln barrels.

Overhang in global oil stocks that built up last year has already been worked off.

Preliminary data suggest q3 2021 could see largest crude oil stock draw in at least a decade

World oil supply rose by 1.1 mln bpd in June to 95.6 mln bpd as OPEC+ eased output cuts, non-OPEC production ramped up.

Global oil demand surged by an estimated 3.2 mln bpd to 96.8 mln bpd in June.

High fuel prices could stoke inflation, damage a fragile economic recovery.

Possibility of a market share battle by producers, even if remote, hangs over markets.

Oil markets are likely to remain volatile until there is clarity on OPEC+ production policy.

Oil demand is set to rise 5.4 mln bpd in 2021 and by a further 3 mln bpd in 2022.

Volatility does not help energy transitions, not in interest of producers or consumers.

Escalating covid cases in a number of countries remains a key downside risk.