Oil futures: Crude rallies 2.5% on supply deficit concerns
Quantum Commodity Intelligence – Crude oil futures Monday were climbing higher as benchmarks continued to claw back post-OPEC+ meeting losses, with analysts forecasting a supply deficit for the remainder of the year.
Front-month Aug24 ICE Brent futures were trading at $81.68/b (1830 GMT), compared to Friday's settle of $79.61/b, while the Aug24/Sep24 widened to almost +$0.40/b.
At the same time Jul24 NYMEX WTI was trading at $77.76/b, versus Friday's settle of $75.53/b.
Markets have now regained all of the losses that came in the wake of last weekend's OPEC+ meeting, with an extension of 2.2 million bpd of cuts likely to keep the supply/demand balance tight for the rest of 2024.
"Action taken by OPEC+ should ensure that the market remains in deficit for the remainder of the year and that should provide support to oil prices during the peak demand period over the summer months," said Warren Patterson, head of ING's commodity research.
Likewise, Goldman Sachs said in its latest report that it expects a supply deficit of up to 1.3 million bpd by the third quarter of 2024 as travel and cooling demand ramps up through the summer, as it maintained its $75-$90/b Brent crude forecast Monday.
Prices were also give a lift at the start of the week after the US Department of Energy tendered for another 6 million barrels for SPR restocking.
Initial focus following the OPEC+ meeting was on the unwinding timetable starting in October, which wiped around 6% off headline prices early last week before a solid rebound.
Prices stabilised at the end of last week as investors look towards several key reports scheduled for this week. Monthly reports from OPEC and the International Energy Agency are set for Tuesday and Wednesday, while the Federal Reserve's interest rate meeting is on the same day.
However, the Fed is almost certain to keep its benchmark rates steady at the end of its two-day deliberations on Wednesday, although analysts will be watching closely for any indication of the timing of the first rate cut in four years.
