By Akpobor Jirue
The price of crude oil rose steadily in June as OPEC Reference Basket (ORB) reached its highest monthly average since October 2018.
According to OPEC’s Monthly Oil Market Report released today, (15 July 2021, the commodity gained an average of $63.85/b in June, representing $24.64, or 62.9%, compared to the same month last year.
The report explained that crude oil spot prices rose sharply in June, extending previous month’s gains, driven by a rally in futures markets, as well as a strengthening global physical crude market, amid higher crude demand from refiners.
It further hinted that investors became increasingly optimistic about the outlook for the oil demand recovery amid expectations for a tighter global oil market in 2H21.
Details of the futures market data contained in the ORB showed ICE Brent front month rose by $5.10 m-o-m in June, or 7.5%, to average $73.41/b, and NYMEX WTI increased by $6.20, or 9.5%, m-o-m to average $71.35/b.
Consequently, the ICE Brent and NYMEX WTI spread narrowed by $1.10 m-o-m to average $2.06/b in June, its lowest level since October 2020.
According to the report, the backwardation structure of all three major oil benchmarks strengthened in June on a tightening outlook for oil supply and demand fundamentals in the coming month.
The report added that hedge funds and other money managers boosted bullish positions related to crude in June, particularly in WTI, as speculators focused on expectations for rising oil prices.
On World Economy, the report stated that global economic growth forecast for 2021 remains unchanged at 5.5%, but noted that an initial assessment, global economic growth for 2022 is forecast at 4.1%.
OPEC is however, insisting that future global growth has continued to be impacted by uncertainties, including the spread of COVID-19 variants and the pace of the global vaccine rollout.
It further stated that sovereign debt levels in many regions, together with inflationary pressures and central bank responses, remain key factors that require close monitoring.
The body is nevertheless optimistic that upside potential could materialize due to ongoing containment COVID-19 measures in combination with additional fiscal and monetary stimulus could turn out to be more effective than envisaged, leading to further gains in consumption and investments.
On the demand side, the report said World oil demand growth in 2021 is forecast at 6.0 mb/d , which has remained unchanged from last month’s assessment, although there have been some regional revisions. Total oil demand is projected to average 96.6 mb/d.