Energy Report: Confidence

Crude oil prices are showing confidence in growing oil demand in part because OPEC plus is as well. OPEC plus has skipped all the drama and decided to follow through on a gradual increase in production because, despite the hit from another wave of COVID in India, the re-opening trade is getting harder for oil traders, and OPEC plus to ignore. Goldman Sachs is not ignoring it and is calling for the, "biggest jump in oil demand in history projecting a 5.2 million barrel a day increase in just the next 6 months mb/d rise, 50% larger than the next largest increase over that time frame since 2000. They also see the supercycle commodities rallying another 13.5% with oil hitting $80.00 a barrel with risks to the upside. This of course agrees with what I have been saying for months and it's good to get support. Even my calls for an oil and commodity super-cycle are being embraced by mainstream thought.

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OPEC plus is not going to change its plans for modest production increases from May to July. Reuters reported that OPEC plus, which is responsible for more than a third of global production, has cut output by around 8 million barrels per day (bpd), equivalent to over 8% of global demand. The reduction includes a 1.0 million bpd voluntary cut by Saudi Arabia. At the April 1st meeting, the group agreed to bring 2.1 million bpd back to the market from May to July, easing cuts to 5.8 million bpd. In a report by OPEC plus experts, the group forecast global oil demand in 2021 would grow by 6 million bpd, after falling 9.5 million bpd last year. But the group said that even though more than 1.0 billion COVID-19 vaccine doses had been administered globally, it was concerned that surges in new virus cases in India, Brazil, and Japan might derail recovering demand for crude.

Oil prices did not seem fazed by a reported +4.319 million barrel increase in crude supply. Perhaps it was because that gasoline supply was down by 1.288 million barrels and distillates down by 2.417 million barrels. The was also a release from the Strategic Petroleum Reserve that made the crude build larger than it would have been. The EIA today may give us direction.

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