Oil futures: Prices ease from highs after US stock draw, poised to end in green

23 Jun 2021

London (Quantum Commodity Intelligence) – Brent crude futures were off from 32-month highs in late afternoon London trade Wednesday after the Wall Street Journal reported the OPEC+ producer group was considering raising output 500,000 barrels per day, while data from the US showed large draws in crude and gasoline stocks.

Front-month August Brent futures were trading at $75.35/barrel (1710 GMT), more than 0.5% up on the day, but off the the earlier high of $75.93/b.

Brent settled Tuesday at $74.81/b.

At the same time August WTI was trading $73.26/b, up from Tuesday’s settle of $72.85/b.

US crude oil stocks fell 7.6 million barrels last week, compared to an expected draw of 4 million to 7 million, while gasoline stocks also fell 2.9 million barrels against an expected build of up to 0.8 million, EIA data showed.

Meanwhile, Iran’s claim that the US had lifted oil and shipping sanctions was largely shrugged off.

“Iran said there is an agreement with the US to lift sanctions that currently block Iranian oil barrels from reaching the global market, but the market took the news with a pinch of salt,” said Louise Dickson, senior analyst with Rystad Energy.

Asked about the Iranian claim of a deal being struck, a senior Middle East source told Quantum, "nothing yet, Iran has a record of jumping the gun," adding that at least one more round of talks was likely needed. 

Meanwhile, Russia is believed to be the primary mover behind the proposal to hike OPEC+ output when the group meets next week, following a report from Bloomberg citing Russian sources.

The report said Russia anticipates the current global oil deficit will persist for the medium term, but Moscow’s final position going into the meeting was still being shaped.

The International Energy Agency in its June report urged OPEC+ to “open the taps”.

The 23-member OPEC+ producer group has up to 6 million barrels of spare capacity, of which Saudi Arabia controls around 40%.

Meanwhile, a $100/b crude oil scenario moved further into the mainstream thinking this week as bosses from top oil companies discussed the possibility at the Qatar Economic Forum.

TotalEnergies Chief Executive Patrick Pouyanne told the forum, "There is quite a chance to see $100/b but we could see in the coming years some lows as we have been accustomed to volatility."