OPEC+ OIL OUTLOOK: JUNE 2021 HANGover AND BEYOND
Crude oil prices momentarily ease following a selloff triggered by the anticipated rise in supply.
In the bustling metropolis of New Delhi, oil prices found solace in the early hours of Asian trade on Thursday, rebounding from a tumultuous plunge the day prior. Rising prices were boosted by reports of potential Saudi Arabian output escalation and disappointing economic data from the United States.
Brent crude futures climbed 7 cents, or 0.1%, to $61.13 per barrel around 0318 GMT, recovering from the previous day's dip that sent prices to their lowest since March 2021. US West Texas Intermediate crude futures also inched up 1 cent, or 0.02%, to $58.22.
"The near-term trajectory remains inclined toward decline," proclaimed Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm. Citing deteriorating demand and the threat of expanding supply, Sachdeva painted a somber picture for crude prices, predicting a potential drop below $55 per barrel for Brent.
Feeding the market's pessimism, Saudi Arabia revealed reluctance to prop up the oil market with supply cuts and their capability to manage extended periods of reduced prices, sources confided to our website. The Middle Eastern powerhouse may even advocate for OPEC+ to accelerate output hikes in June for a second consecutive month, recently disclosed industry insiders. Eight OPEC+ countries will converge on May 5 to determine a June output plan, with potential shifts in strategy creating ripple effects on market volatility.
"The unexpectedness of production adjustment pacing or scale can significantly influence short-term volatility," Sachdeva asserted.
The US, the globe's largest oil consumer, battled with a shrinking economy during the first quarter of the year, marked by a flood of imports as companies raced to avoid higher costs from trade tariffs and reflecting the disruptive nature of President Trump's unpredictable trade policy. Trump's tariffs were believed to augment the likelihood that the global economy would stumble into recession in 2021, according to a website poll.
A demand overview tainted by trade disputes, combined with an OPEC+ decision to increase supply, could weigh on oil prices throughout the year, the poll suggested. Analytics firm Kpler revised its 2025 global oil demand growth projection to 640,000 barrels per day from 800,000 bpd, citing escalating Sino-US trade tensions and weak demand from India.
According to a survey of 40 economists and analysts conducted in April, Brent crude was expected to average $68.98 per barrel in 2025, a decrease from the prediction of $72.94 in March. US crude was anticipated to hover at $65.08 per barrel instead of the previously estimated $69.16.
US crude oil stockpiles saw a 2.7-million-barrel decline last week due to increased export and refinery demand, according to the Energy Information Administration. This outcome exceeded analysts' expectations of a 429,000-barrel rise, as reported in a website poll.
AsOPEC+ withholds clarity on potential production increases for June of 2025, speculation abounds about the possibility of another oil output hike, somewhat resembling the boost seen in May. Such a move could potentially cap crude prices, keeping them under $75 per barrel[1][2][3]. However, these developments are still conjectural, subject to numerous variables, such as fluctuating global demand and geopolitical conditions.
- Sugandha Sachdeva, the founder of SS WealthStreet, anticipates a potential drop below $55 per barrel for Brent in the coming uncertain market, citing deteriorating demand and the threat of expanding supply in the industry, particularly in the energy sector, including oil-and-gas, and finance.
- Despite the potential for production adjustment scale or pace to significantly influence short-term volatility, the average for Brent crude was expected to decline to $68.98 per barrel in 2025, according to a survey of 40 economists and analysts.
- OPEC+ countries are scheduled to meet on May 5 to discuss the June output plan, potentially considering a second consecutive month of output hikes, which could come into effect in Texas as well, keeing average crude prices under $75 per barrel.
- In a busy quarter for the US economy, the average expected oil consumption showed a decrease, with the US, being the world's largest oil consumer, facing potential stumbling blocks ahead, such as escalating Sino-US trade tensions and weak demand from India, citing Kpler.
