Macro Oils short-term outlook: July 2021 Report

Commodity Market Report 09 July 2021

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Report summary

Prices strengthened during June, rising from $68 to $77 per barrel for Brent over the month, as demand is recovering strongly in the US and continuing to grow in other large economies. In contrast, the new Covid variants challenge the pace of demand recovery in H2 2021 as vaccines are gradually distributed, especially in emerging economies. Key topics include: • Our OPEC+ production scenarios after failing to reach an agreement • How US producers are responding to current market conditions • The new detailed Canada production forecast • Demand recovery continues in Europe, Russian and the Caspian while Asia growth slows

Global supply: OPEC+ expected to continue lifting production restraint gradually, despite lack of new agreement
- OPEC+ fail to reach agreement at early July meeting
- Non-OPEC Supply: NOC targets drive supply revisions
- US Lower 48: private operators pick up the pace, but supply remains steady
- Mexico: PEMEX priority fields offset natural declines
- OPEC: minor upward revisions focus on Iran
- Iran elects new President
Global demand: Downside risk to H2 2021 recovery looms as vaccination pace is challenged by new Covid-19 variants
- 2021: Growth path continues through the end of the year, but the recovery remains uneven
- 2021: Quarterly demand breakdown
- 2021: Regional demand
- 2022: Demand’s growth trajectory now accelerates in H2 2022
- Risks to the outlook