OPEC+ is expected to agree to continue with its incremental increases in production through to July, Trend reports with reference to Capital Economics, a UK-based research and consulting company.
“We think it unlikely that the group will address the thornier issue of the ongoing rise in Iran’s production and the risk of a more rapid upturn in supply if a new nuclear deal is reached with the US. Presumably, if a deal is reached, OPEC+ members will seek to bring Iran into the quota system at some point, but the timing and size of Iran’s quota will probably prove contentious.
Otherwise, it has been a relatively quiet week in commodities markets, which may reflect the ongoing uncertainty about the outlook for demand. The vaccine rollout in the US has been impressive but the recent economic data have been a little subdued and the scale of the hit to India’s commodity consumption in the wake of the latest wave of the virus there is still unclear. More positively, China’s manufacturing PMIs are due to be published early next week and they could give a fillip to metals prices if, as we think likely, they ticked up in May,” said the company.
“After tumbling last week on signs that a new nuclear deal between the US and Iran was close to being agreed, the price of Brent rose sharply to around $70 per barrel this week as reports emerged that both sides remain far apart. Prices have also been bolstered by a stronger demand outlook, particularly in the US. Indeed, the latest data show that US implied gasoline demand is now back at pre-pandemic levels (3), although the data may still be distorted by the panic buying during the recent Colonial pipeline shutdown. Elsewhere, the price of Asia spot LNG continued to climb. A combination of supply issues in exporting countries, including Australia, and strong Asian import demand has driven up the price in recent weeks. Despite weaker demand from India, imports have been high for the time of year (4). Strong Asian demand has also pushed up the Pacific coal price lately, and we expect this to continue, ensuring that prices remain elevated for the rest of the year.”