Demand for Oil Decreases as Investors Wait for OPEC+ Meeting

Oil prices in Asia fell in early trading on Tuesday, and the decline remained below US$73 per barrel. The drop could be caused by the rapid spread of the COVID-19 virus in certain countries, dimming the fuel demand outlook. Investors are still waiting for the Organization of Petroleum Exporting Countries and its allies (OPEC+) meeting later this week.

As of 10:20 pm Eastern Time (2:20 am GMT), Brent crude oil futures fell 0.38% to US$73.86. Moreover, crude oil WTI futures fell 0.32% to US$72.68. Due to the economic recovery from COVID-19 in markets including the U.S. and China, oil rose by approximately 10% in June 2021.

New York futures fell slightly after falling 1.5% on Monday. The more contagious delta variant of the virus has caused a surge in cases in the U.K. It has caused restrictions and lockdowns to be re-implemented in other regions.

What Are OPEC+ Supply Predictions?

OPEC+ should increase supply by 500,000 to 1 million barrels per day at the August cartel meeting on the supply side.

As the rebound of the COVID-19 pandemic accelerated in critical regions such as the U.S. and China, oil prices still rose by about 10% this month. That supported the surge in global fuel consumption and tight supply.

Futures and swaps in the world’s central pricing locations are in a bullish spot premium structure. They indicate that the physical market needs more barrels.

Since January on Monday, the U.K. reported the newest COVID-19 cases. Hong Kong, Spain, and Portugal have all imposed new restrictions on tourists from the country. The authorities are also racing to control the outbreak in Australia. The virus outbreak may cause Asia’s export-focused refineries to cut processing rates.

OPEC+ expects that the global oil market will continue to be in deficit this year if production remains stable. Estimated data submitted to the Joint Technical Committee show that the daily demand in August will exceed the supply by 1.7 million barrels.