Britain Plans Economic Reopening
April 6, 2021
The market was under selling pressure yesterday as OPEC+ plans to ease back on production cuts, US rigs count goes up and with that the outlook for more production, and lingering concerns about the demand recovery due to Covid cases rising and mutant varieties.
Goldman Sachs forecast a larger rebound in oil demand this summer than OPEC and the IEA, requiring an additional 2 million bpd increase in OPEC+ production from July to October. It expects a normalization in excess oil inventories by this fall. The bank also stated that the OPEC+ deal to increase production comes a month sooner than it had expected and added that the June and July increases are smaller than it had previously forecast.
Estimates are out saying Iran’s production could ramp up quickly to near 2 million bpd if the nuclear negotiations going on now make progress and US sanctions get lifted. Of course, so far Iran has increased production with no push back from the Biden Administration so maybe they can get to 2 million bpd anyway. As per the Goldman Sachs forecast above the market may need those barrels.
British Prime Minister, Boris Johnson , said a planned reopening of the economy would take place next week, with the opening of all shops, gyms, hairdressers, and outdoor hospitality areas in England. While the outlook for the UK looks good rising covid cases in India are a concern for the market.
Vortexa data showed that the amount of crude oil held around the world on tankers that have been stationary for at least 7 days increased to 113.35 million barrels as of April 2. That is up 7.8% from the 105.12 million barrels on March 26.