The Commodities Feed: Surprise inventory build | MENAFN.COM – MENAFN.COM

The Commodities Feed: Surprise inventory build | MENAFN.COM – MENAFN.COM

It has been quite the week for oil, with ICE Brent plunging below US$70/bbl, and trading to its lowest levels since May, with growing concerns over the spread of the Delta variant and what this will mean for demand. This is particularly the case in Asia where vaccination rates are still relatively low, and so governments in the region are having to tighten restrictions. We believe that the latest agreement between OPEC+ to increase output and extend the deal further into 2022 is supportive, given that it reduces the risk of the broader deal falling apart, and so minimizes the likelihood of a price war. The agreement has provided more certainty for the market, and so in theory should reduce volatility. However, clearly this week, macro and demand concerns have overshadowed supply developments. While we saw a bit of a relief rally yesterday following Monday's sell-off, the market is still trading below US$70/bbl and has come under a bit of downward pressure in early morning trading today after a bearish and rather surprising inventory report from the API. The API overnight reported that US crude oil inventories increased by 806Mbbls last week, which was very different from the roughly 4.