Oil: OPEC increases to prevent sustained rallies for now – TDS

OPEC+ members agreed to continue the gradual increase in output. With global demand concerns, WTI is set to trade below the $70 level, Bart Melek, Head of Commodity Strategy at TD Securities, reports.

OPEC+ increases put a pall on oil rally

“The crude market will very likely continue to face headwinds from the Delta variant as it will take time for full Pfizer Vaccine approval to increase vaccination rates, while the planned 400k b/d OPEC+ supply increase also removes some supply side support.”

“With demand lower than expected just weeks ago, it certainly looks like the global crude market will not be as tight as originally thought. Indeed, the previously projected deficits in Q3-2021 will likely turn into modest surpluses.”

“Crude should have a hard time rallying much above the recent trading range. Any sustained move above the $70/bbl mark, will require more certainty on the demand side and no sudden production increases from Iran.”