Oil futures: Brent holds above $71/b as market shrugs off downbeat IEA report

Quantum Commodity Intelligence – Crude oil futures in late afternoon London trading hours Thursday were little changed on the day, largely consolidating the previous session's strong rebound, which had seen prices rally by around $2/b from the intraday lows.

At the London 430pm close front-month October ICE Brent futures were trading at $71.19/barrel (1530 GMT), compared to Wednesday's settle of $71.44/b and the previous-day's London close of $70.17/b.

At the same time September NYMEX WTI was trading $68.98/b, versus Wednesday's settle of $69.25/b.

Both benchmarks, however, traded in a range of more than $1/b as the earlier upwards momentum was halted by the downbeat International Energy Agency report, before prices later stabilized.

Both benchmarks, however, traded in a $1/b ranges as the earlier upwards momentum was halted by the downbeat International Energy Agency report, before prices later stabilized.

In its latest report, the IEA said it sees Q3 2021 global oil demand averaging 97.4 million bpd, compared to its July report forecast of 98.1 million bpd, a downwards revision of 700,000 bpd.

"We now estimate that demand fell in July (down 120,000 bpd m-o-m), as the rapid spread of the Covid-19 Delta variant undermined deliveries in China (down 760,000 bpd m-o-m), Indonesia (down 130,000 bpd m-o-m) and other parts of Asia," said the report.

Prices had tumbled Wednesday following a call from the White House for the OPEC+ group to release more barrels into the market as a means of bringing down US retail gasoline prices, although markets quickly rebounded.

"It shows that OPEC+ alone has the capability at present to significantly increase the supply of oil, which means it has the market power," said the German bank, adding, "it makes it clear that US shale oil producers have lost their former role as 'swing producers' – i.e. they no longer dictate who gets the last barrel needed."

The bank said it remains to be seen whether OPEC+ will comply with the US wishes, but added that previously announced increases are enough to keep the oil market largely balanced.