Markets

Concerns about hiccups in the demand recovery took a backseat to supply disruptions during the week ending Aug. 27 after a fire at an offshore production platform on Aug. 22 took out production in the western Gulf of Mexico's Bay of Campeche.

Rising coronavirus-infection rates and data indicating that economic improvements are beginning to slow down in parts of the world led to a reignition of concerns about the fragile demand recovery.

Even as the Delta variant continues to slow the recovery for global oil demand, producers are still maintaining tight control on crude output.

Escalating tensions in the Middle East did little to support oil prices during the week ending Aug. 6 as traders' thoughts were occupied with the Delta variant of the coronavirus and the possibility that new outbreaks could derail the improvements made so far in oil demand as well as the overall economic recovery.

Traders regained confidence that the market will be able to consume the extra production planned by OPEC+ as the group is set to gradually loosen its production constraints in Aug.

After having taken a hit on Monday in response to the announcement of more production from OPEC+ in the near future, most of the contracts covered here saw day-on-day price increases on each of the remaining days of the week ending July 23, though DME prices were not available on Monday or Tuesday due to Eid al-Adha celebrations.

While OPEC+ was reportedly hammering out an agreement to boost production in Aug. during the week ending July 16, indications of hiccups in the demand recovery around the world weighed on sentiment.

Contradictory interpretations of the standoff between the UAE and fellow OPEC+ members pushed petroleum futures prices higher and then lower before bullish inventory and demand figures from the US EIA sparked a renewed uptick for the last two days of the week ending July 9.

Throughout most of the week, futures prices were supported by expectations that the group's meeting on July 1 would result in plans to increase production by a smaller volume than projected demand increases.

Traders seem to have become convinced that recovering demand will be able to handle production increases from OPEC+, and oil futures prices were pushed higher amid the positive sentiment.