Original title: TD Securities: us Oil is expected to break the $70 mark
Bart Melek, head of commodity strategy at (TD Securities) at TD Securities, said that despite the increase in Iran's crude oil production, the group cautiously returned to the market, creating the conditions for crude oil prices to reach more than $70 a barrel. The core points are as follows.
The Organization of Petroleum Exporting countries and its allies insisted on cautious production production as planned, but did not discuss plans to increase production after July. Given that demand is expected to grow rapidly, the market will face a sizeable deficit over the next six months under these assumptions.
OPEC+ maintained its plan to increase production in July because the Saudi-led cartel sounded optimistic about a recovery in global oil demand. The producer group agreed to maintain its current plan to increase the oil production quota by 350000 b / d in June and 440000 b / d in July.
Given that demand is expected to grow by 5 million b / d in the second half of 2021, there is likely to be a considerable gap over the next six months. Because the supply of the OPEC+ program cannot keep up with the growth of demand.
So it can be argued that once these risks are mitigated, oil-producing countries are likely to increase production because we believe they want to regain market share and do not want oil prices to soar, because this will stimulate US shale producers to increase production or undermine demand. However, an increase in supply will not be announced until the issue of Iranian production is clear.
We expect the global oil market to remain in a considerable deficit in the short term, which is good for prices, so it is reasonable to say that US crude oil futures may exceed $70 a barrel, but will not continue to rise significantly, as the currently suspended OPEC+ capacity will be redeployed and Iran will increase production.
As of press time, the price of US crude oil futures was at 68.05 US dollars per barrel, up 0.49%.
Brent crude oil
The futures price was at 70.72 US dollars per barrel, up 0.60%.