OPEC Monthly Oil Market Report, July 2021
Crude Oil Price Movements: Crude oil spot prices rose firmly in June, extending previous monthly gains, driven by a rally in futures markets, as well as a strengthening global physical crude market, amid higher crude demand from refiners. The OPEC Reference Basket (ORB) increased for the second-consecutive month in June, reaching its highest monthly average since October 2018. The ORB value rose $4.98 m-o-m, or 7.4%, to settle at an average of $71.89/b. Year-to-date (y-t-d), the ORB averaged $63.85/b, representing a gain of $24.64, or 62.9%, compared to the same month last year. In June, investors turned increasingly optimistic about the outlook for the oil demand recovery amid expectations for a tighter global oil market in 2H21. The ICE Brent front month rose $5.10 m-o-m in June, or 7.5%, to average $73.41/b, and NYMEX WTI increased $6.20, or 9.5%, m-o-m to average $71.35/b. Consequently, the ICE Brent and NYMEX WTI spread narrowed by $1.10 m-o-m to average $2.06/b in June, its lowest level since October 2020. The backwardation structure of all three major oil benchmarks strengthened in June on a tightening outlook for oil supply and demand fundamentals in the coming months. Hedge funds and other money managers boosted bullish positions related to crude in June, particularly in WTI, as speculators focus on expectations for rising oil prices.
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