Crude Oil Prices Test $70 Threshold
June 8, 2021
OPEC’s Secretary General Mohammad Barkindo, said OPEC and its allies expect oil inventories to fall further in the coming months, suggesting efforts by the producers to support the market are succeeding. He said oil stocks in the developed world nations fell by 6.9 million barrels in April, 160 million barrels lower than the same time one year ago. He said OPEC+ compliance was 114% in April.
According to BP’s Chief Executive Officer, Bernard Looney, the company sees a strong recovery in global crude oil demand and expects it to last some time, with US shale production being kept in check. His comments echo those of other industry executive encouraged by a rebound from the pandemic in the US, China , and Europe.
According to data from TomTom, traffic in 15 European cities was as busy as in 2019 for the first time since the coronavirus pandemic started. This compares with a drop of 15% a month ago and a decline of as much as 34% in the most recent wave of virus infections in the region.
Chinese data showed that crude oil imports for May 2021 fell down to 9.69 million bpd from 9.86 million bpd in April. China oil imports are down 14.6% in May 2021 versus May 2020. The data appears to show the Chinese refineries are hesitant to import more oil at these higher prices and are drawing down on oil inventories stored. This fall in imports is a big number but it was just a year ago that China was loading up on low priced oil. Also impacting this number is heavy refinery maintenance.
Oil tested the $70 dollar level and we are now seeing traders take some profits as the prices are softer this morning. Also adding sell pressure is the Iran nuclear talks getting some press again and a softer US Dollar index. The market overall still has bullish support and any softness here appears temporary, as the bears as the one that need to do the work and move this market lower if they hope to change the trend.