FXStreet reports that OPEC supply is rising just as demand growth hits some headwinds. Brent Oil is trading above the $45 but strategists at ANZ Bank believe the black gold will be unable to maintain such level in this quarter.
“Rising supply risks overwhelming the fragile recovery in oil demand. The sharp rebound in demand has seen prices recover and producers grow in confidence that the market can absorb more crude. However, high-frequency data suggest the recent surge in COVID-19 cases is slowing demand growth.”
“The easing of restrictions in many parts of the US and Europe have slowed amid a pick-up in infections. Overall, we estimate demand has risen 8mb/d over the past four months to 88mb/d. However, this is still 13mb/d below this time last year. In the second half of the year, we expect growth in crude oil demand to fall. This will see global demand push above 90mb/d in Q4 2020.”
“The rebound in prices over the past few months has emboldened OPEC to stick to its supply agreement by increasing output by 2mb/d in August. Whether the market can withstand the additional output will depend demand rising in Asia. Weak margins and high inventories are threatening import demand from major consumers such as China and India. As such, we struggle to see Brent crude remaining above $45/bbl in Q3.”
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