Delta Variant Threatens Recovery in Europe, Asia and Australia
June 29, 2021
Energy prices sold off yesterday as the market is getting a little dose of reality on the economic recovery as rising cases of the COVID-19 Delta variant in Europe, Southeast Asia and Australia are bringing back lockdowns. Also helping the downside yesterday is the overall outlook that OPEC+ will ease back on their production quotas by 500,000 to 1.0 million bpd.
RBC’s head of global commodity strategy, Helima Croft, said the coalition “will answer the call to put more barrels on the market” when it meets on July 1.
OPEC+ released a report indicating that the world oil supply was short of demand by 280,000 bpd in Q1 of this year. In August their outlook expects the deficit to be 1.480 million bpd and in Q4 2021 2.22 million bpd. This outlook leaves OPEC room to add production at their meeting on July 1 as some degree of a deficit is estimated by most analysts.
The bulls have a good cushion in the fact that the market could correct lower and still be in its uptrend. Already this morning we are seeing buyers jump in on yesterday’s pullback. The market is at a minimum stuck in its range for the near term.