Demand for energy continues to normalize while the combination of market-driven cuts and large-scale OPEC+ cuts help accelerate the market rebalancing as the deal is set to be extended a couple of months, per TD Securities.
Read: Brent Oil completes a 1-3 month base, $39.70 next resistance – Credit Suisse
Key quotes
“Cellphone tracking data suggest that driving mobility has substantially recovered from its coronavirus nadir, while flight tracking also suggests a noteworthy recovery. In this context, OPEC+ has an opportunity to further accelerate the rebalancing by pushing forward the timeline for its scheduled tapering of cuts.”
“In contrast to prior disagreements, Russia and Saudi Arabia have signaled they are both on the same page when it comes to the benefits of an extension, but are displaying a show of force against those countries that have been defying their quota and producing more than agreed upon.”
“The disagreement is now on whether those countries should ‘make-up’ for their excess production by a steeper curtailment in the coming months. The most notable non-compliance is from Iraq, where other members exert a significant amount of geopolitical influence.”
“Ultimately, it is likely that the deal is extended for 1-2 months, as non-complying countries have a large incentive to not interfere with the rebalancing and ensure the deal goes through.”
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