OPEC+ production cuts announced earlier this month risk exacerbating an oil supply deficit expected in this year’s H2 and further weigh on a global economy still trying to recover from the COVID-19 pandemic, the International Energy Agency said Friday.
The gap between the availability of crude in the global oil market and rebounding demand will reach 2M bbl/day by Q3, the IEA said in its monthly report.
The gap, which oil producers outside of OPEC will be unable or unwilling to fill, risks sending crude prices sharply higher, worsening inflation just as it appears to be moderating, the IEA said.
The agency said it forecasts global oil supply will fall by 400K bbl/day by year-end, citing an expected production increase of 1M bbl/day from outside of OPEC+ vs. a 1.4M bbl/day decline from OPEC+.
For the week, front-month Nymex crude (CL1:COM) for May delivery ended +2.2% to $82.52/bbl, and front-month June Brent crude (CO1:COM) settled +1.4% to $86.31/bbl, with both benchmarks posting their fourth straight weekly gain.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (DBO), (SCO), (USL), (DRIP), (GUSH), (USOI), (NRGU)
U.S. crude is hovering near five-month highs after OPEC+ surprise production cut plan, also boosted by declining U.S. stockpiles, weaker flows from Russia and interruptions to pipeline supplies from Iraqi Kurdistan.
The top energy stock ETF, the Energy Select Sector SPDR Fund (NYSEARCA:XLE), +2.6% for the week.
Top 10 gainers in energy and natural resources during the past 5 days: (PPSI) +34%, (DFLI) +28%, (ATLX) +27.6%, (GTLS) +19.8%, (NEXT) +18.7%, (AMLI) +17.4%, (SLI) +16.4%, (TGS) +14.5%, (NRT) +13.5%, (ELP) +13.4%.
Top 5 decliners in energy and natural resources during the past 5 days: (USAU) -25.1%, (EPOW) -16.4%, (CETY) -14.9%, (NMG) -12.6%, (CHNR) -9.3%.