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.

Saudi Arabia set the Official Selling Price (OSP) for its heavy grade for buyers in the Far East at $1.40/bbl above the Middle-Eastern benchmark—up from the $1.20/bbl premium that had been in place for Aug.

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.

Saudi Arabia set the Official Selling Price (OSP) for its heavy grade for buyers in the Far East at $1.20¢/bbl above the Middle-Eastern benchmark—up sharply from the 40¢/bbl premium that had been in place for July.

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.

After the three contracts gained 21.9-23.7% over 1Q, futures closing prices for Middle Eastern benchmark DME Oman rose by another 14.8% from March 31 to April 30, European benchmark ICE Brent jumped by 18.2%, and US benchmark NYMEX WTI soared by 24.2%. Brent was the first of the three grades to break the $70/bbl mark, having closed above the important psychological barrier on June 1.

The coking margin on WTI in the Midcontinent posted the sharpest increase from Feb. to March among the grades and blends covered in the charts below.