New York lifts statewide pandemic restrictions
Top Forecasters Think About $ 100 / bbl of Oil
New York Harbor product cracks weaken as RINs recede
Crude futures hit new highs on June 15 as the bullish outlook for US demand pointed to a tightening fundamental situation.
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NYMEX July WTI rose $ 1.24 to $ 72.12 / bbl, and ICE August Brent climbed $ 1.13 to $ 73.99 / bbl.
“Oil continues to rise here and that is largely due to the fact that the history of the recovery in crude demand still appears to be quite robust,” said Edward Moya, senior market analyst at OANDA. “There’s a lot of optimism that we’ll get back to normal probably right after the summer ends, and that’s something a lot of people weren’t expecting.”
This was the highest month settlement for WTI since October 10, 2018, while ICE Brent was higher on April 25, 2019.
On June 15, New York Governor Andrew Cuomo lifted all remaining pandemic restrictions, with the statewide adult vaccination rate reaching the 70% threshold.
NYMEX July RBOB fell 7 points to 2.1705 / gal, while July ULSD climbed 7 points to $ 2.11123 / gal.
The International Energy Agency said on June 11 that it expects global demand for oil to return to pre-pandemic levels by the end of 2022. The IEA predicts that demand The world of oil will grow by 5.4 million b / d in 2021 and an additional 3.2 million b / d in 2022 to an average of 99.5 million b / d.
But outside the United States, the story of the energy recovery is less certain, analysts say.
“In China, which has carved out the lion’s share of the recovery over the past 15 months, [demand] seems to be cooling off somewhat again: high prices, low refining margins, fairly high inventories and increasing attention to electric vehicles are all taking their toll, ”said Eugen Weinberg, head of commodities research to Commerzbank, in a research note on June 15.
British Prime Minister Boris Johnson announced on June 14 that the government would extend the June 21 deadline by four weeks to ease pandemic restrictions, as the spread of the new variant of the coronavirus has contributed to the increase in the number of cases.
Nonetheless, OPEC + production management is likely to contribute to a tight supply later in 2021 that should support higher prices, analysts said.
Vitol, the world’s largest independent oil trader, expects global oil prices to trade between $ 70-80 / bbl for the remainder of 2021 as OPEC + producers maintain production discipline to deal with the expected return of Iranian oil exports to the market, CEO Russell Hardy said on June 15.
The oil market could return $ 100 / bbl this year, major oil forecasters said on June 15, but the consensus is that OPEC + sets a price cap with heightened risks of supply shortages and potential shocks to markets. prices in the years to come.
Jeff Currie, head of commodities research at Goldman Sachs, urged the idea of triple-digit crude at the S&P Global Platts GEPEC conference, while warning against ending investments in projects long-term crude oil and the knock-on effect that could have on prices. outside.
The advocate of the commodities super cycle added in the short term that markets give a 10% chance that oil will exceed $ 100 / bbl by the end of 2021.
Product cracks weaken as RINs recede
The prices of refined products in the United States were little changed as continued weakness in values of renewable IDs added headwinds.
S&P Global Platts valued the current year’s D6 RINs at $ 1.4475 / RIN on June 15, down 21 cents, or 13%, from June 14 and down nearly 28% from from their all-time high of $ 2 / RIN seen intraday at the start of June 10.
Refiners and importers, called “obligated parties,” use RINs to show the EPA that they have fulfilled their government mandate to use renewable fuels. If the obligated party has not used enough physical products, it can purchase RINs to meet the quota.
The market is covering possible policy relief to refiners by selling RBOB and ULSD cracks, said Sergio Baron, analysts at S&P Global Platts.
The ICE New York Harbor RBOB crack against Brent fell to around $ 17.31 / bbl in the afternoon session of June 15, down from $ 18.41 / b on June 14 and on pace for the close the lowest since March 19. The ICE NYH fuel oil crack against Brent was down more than $ 1 to around $ 14.88 / bbl, the lowest since May 3.