Oil futures: Prices rebound on US jobs data, but OPEC+ meeting looms

24 Jun 2021

London (Quantum Commodity Intelligence) – Crude oil futures rebounded strongly in late-afternoon London trading Thursday after after the US released strong jobs data, which countered the earlier bearish sentiment over potential production increases from the OPEC+ group.

The economy US added 559,000 jobs last month, double April's disappointing total, and the unemployment rate ticked down to 5.8% from 6.1%, according to data released Friday by the Bureau of Labor Statistics.

Front-month August Brent futures were trading at $75.41/barrel (1545 GMT), compared to Wednesday’s settle of $75.19/b, and up from the day's low of $74.53/b.

At the same time, August WTI was trading at $73.21b, up from Wednesday’s settle of $73.08/b.

Prices were weighed down earlier on growing calls for OPEC+ to step up production, including India’s oil minister Dharmendra Pradhan during a virtual meeting with the OPEC Secretary General.

“I took the opportunity to express India’s deep concern on increasing crude oil prices and its impact on consumers as well as on (a) smart economic recovery,” Pradhan said on Twitter.

Analysts have also increasingly factored in an output hike from August. 

"OPEC+ is expected to loosen supply, either officially with a higher production target or unofficially with compliance slippage," said Louise Dickson, senior analyst with Rystad Energy.

"The current target production level of 36.2 million bpd for July 2021 will likely be surpassed by at least 1 million bpd of OPEC+ crude supply, and perhaps even more."

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

With the 23-member producer group sitting on around 6 million barrels of spare capacity, OPEC+ has come under pressure to announce a further increase when it meets next week.

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

Commerzbank said, "...given the good sentiment and robust demand, OPEC+ is likely to find it easy next week to announce a further increase in production, at least for August."

The producer group began lifting production curbs in the second quarter with an extra 350,000 bpd in May, 350,000 bpd in June, and a further 400,000 bpd for July.