Crude Hits 7-Week High, But Q4 Optimism Fades
After rebounding to 7-week highs, Brent crude faces fragile optimism. Despite forecasts of Q4 recovery, risks persist—variant threats, uneven demand, inflation pressures, OPEC+ uncertainty, and China’s new crude-release strategy.
After coming under pressure through August and early September, Brent crude prices have steadily crept back up towards the $75/barrel mark since mid-September. These levels were last seen at the end of July, just before the Delta variant led global Covid resurgence spooked the markets and pressured oil prices lower.
But the big question is, are the major economies hit by the Delta wave in recent months, prominent among them the US and China, firmly back on the recovery track? And related to that, is global oil demand recovery past its Q3 setback and poised to resume a rebound in the fourth quarter?
The International Energy Agency and OPEC appeared sanguine in their September monthly market outlook reports. The former stuck to its 2021 global oil demand forecast made last month, while the latter even upgraded it marginally.
The US Energy Information Administration made a modest downward revision to its outlook for 2021 global consumption, but was outweighed by the IEA and OPEC’s optimism, which became a supportive element for crude.
The IEA and OPEC jacked up expectations for global oil demand in the fourth quarter of this year, but we would take that with a pinch of salt. We…
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