OPEC output grows in May – ING

ICE Brent hit its highest level since mid-May yesterday, with the front-month contract trading just shy of US$66/bbl. Wildfires in Alberta, Canada, provided a boost to prices. This, at a time when the market is digesting the announced OPEC+ July supply hike. There continue to be clear signs of tightness in the spot Oil market as we move closer towards the Northern hemisphere summer. Both Brent and WTI prompt timespreads strengthened recently, while trading is in deep backwardation, ING's commodity experts Ewa Manthey and Warren Patterson note.

OPEC’s output is going to continue trending higher

"Supply risks around the Alberta wildfires appear to be receding, at least for now, due to rainfall. Oil producer Canadian Natural Resources restarted production at one of its sites after halting production last week due to fires. However, this relief could be short-lived amid forecasts for drier and warmer weather towards the end of this week."

"Preliminary production numbers from a Bloomberg survey show that OPEC production increased by 200k b/d month-on-month to 27.54m b/d in May. This was less than OPEC’s share of just over 300k b/d of the total 411k b/d OPEC+ supply increase. Some OPEC members had already been producing above their targets, reducing the actual supply increases in the market. In addition, some members -- including Saudi Arabia -- fell short of production targets. Following large supply hikes for June and July, the group’s output should continue trending higher at least for the next couple of months."

"Inventory numbers overnight from the American Petroleum Institute show that US crude Oil inventories fell by 3.28m barrels over the last week. However, the balance of the numbers is fairly bearish. Crude stocks at Cushing increased by 952k barrels, while for refined products, gasoline and distillate inventories grew by 4.73m barrels and 761k barrels, respectively."