Macro Oils short-term outlook: August 2021 Report

Commodity Market Report 06 August 2021

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Report summary

After a strong showing in June and July, the upward momentum in prices eased in early August. We saw Brent edging up toward $80/bbl in those months as fears of a tight fourth quarter took over. The OPEC+ agreement to increase supply steadily over the next year eased those concerns since the group’s 18 July meeting. The Covid resurgence is also increasing the downward risk for demand growth although we have barely reduced our 2021 demand growth forecast in this monthly update. Key topics include: • US Lower 48: capital discipline continues to limit public operator spending • Regional demand recovery diverges as Covid cases rise • Our OPEC+ forecast under the new 18 July agreement • Liquids demand to exceed 2019 levels in H2 2022

Global supply: OPEC+ reach agreement to unwind production cuts
- OPEC+ reach agreement to extend deal through 2022
- Non-OPEC supply: moderate changes, recent FIDs signal optimism
- US Lower 48: capital discipline continues to limit public operator spending
- OPEC: minor upward revisions focus on Iran
Global demand: Regional divergence emerges in response to rising Covid-19 cases
- 2021: H2 2021 growth path diverges by region
- 2021: Quarterly demand breakdown
- Product level demand: Petrochemical feedstock leads the recovery
- 2022: Demand’s growth trajectory now accelerates in H2 2022
- Risks to the outlook