Oil prices continue the weekly upward momentum for the third week in a row with flat fluctuations. At the end of the week, both benchmarks moved up with the same magnitude, trading in the upper $60s. Brent crude price rose by $0.43 to $68.71 per barrel. West Texas Intermediate rose by $0.47 to $65.37 per barrel.
OPEC’s monthly oil market report came with two surprises, one bearish and one bullish. The bearish surprise was that the organization reported a surprising surge in commercial oil inventories, increasing by 10 million barrels month-on-month in March 2021 — 13.5 million barrels higher than the same time a year ago and 37.8 million barrels above the latest five-year average.
The bullish surprise was that OPEC reported a huge drop in non-OPEC oil and gas investments in exploration and production in 2020. At $311 billion, it is the lowest seen for 15 years and is expected to remain unchanged in 2021. This is compared to the high level of $718 billion seen in 2014.
OPEC’s oil demand outlook was unchanged from last month’s estimate, averaging 96.5 million barrels per day (bpd) despite indications of a global economic recovery, central banks’ assertion of an environment of low interest rates and the continuing program of asset purchases. On the supply side, OPEC crude oil production rose by 70,000 bpd in April and hit a three-month high of 24.96 million bpd.
On the other hand, the International Energy Agency (IEA) monthly oil market report predicted a slight downward adjustment to oil demand outlook, down from 96.7 million bpd to 96.4 million bpd. The downward revision was due to lower global refining throughput amid weaker consumption in Europe and North America in the first quarter and the lower oil demand in India in the second quarter as a result of the surge in coronavirus disease (COVID-19) cases.
• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter: @faisalfaeq