Commodities

Oil drifts sideways ahead of OPEC+ meeting

Reuters SINGAPORE | Updated on July 01, 2021

West Texas Intermediate rose more than 10 per cent in June, Brent over 8 per cent

Oil prices traded sideways on Thursday as investors waited for a decision from key producers o n whether they would maintain or ease supply cuts in the second half of the year.

Brent crude for September edged up 1 cent to $74.63a barrel by 0048 GMT while the U.S. West Texas Intermediate crude for August was at $73.46 a barrel, down 1 cent but near its highest since 2018 of $74.45.

WTI rose more than 10 per cent in June while Brent added over 8%,touching highs since 2018, as summer travel picked up and more people got vaccinated. But renewed lockdowns in Asia amid the spread of a highly contagious Covid-19 variant capped demand.

In response to rising demand, U.S. crude stockpiles fell last week for the sixth straight week, data from the Energy Information Administration showed.

A drop in crude inventories at Cushing, Oklahoma, the delivery point for WTI, to the lowest since March 2020 also underpinned the U.S. benchmark.

Analysts had forecast a wider supply deficit globally in the second half as the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, maintained production cuts while demand rises.

Brent was seen averaging $67.48 a barrel this year and WTI $64.54, both up from forecasts in May, a June Reuters poll showed.

OPEC+ is easing supply cuts between May and July by 2.1million barrels per day and will meet on Thursday to decide whether to leave production unchanged or boost output, possibly by more than 1 million bpd or by a more modest 0.5 million bpd.

"Sideline discussions indicate that Russia is proposing toboost supply while Saudi Arabia wants a more cautious approach,"ANZ analysts said, adding that renewed outbreaks of the Delta virus variant are raising concerns demand recovery may falter.

Published on July 01, 2021

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