Oil Prices Rebound as Supply Disappoints and Summer Demand Looms – ING

Oil Prices Rebound as Tight Supply Meets Summer Demand – ING

Oil markets rebounded strongly, with ICE Brent crude climbing to $65.76 per barrel as a combination of US Dollar weakness, geopolitical risks, and subdued OPEC+ output expectations drove prices higher. According to analysts at ING, this upward momentum has extended into today’s early trading session.

Brent Timespread Signals Tighter Market

ING notes that the prompt Brent timespread has widened significantly, now in backwardation of more than $0.70 per barrel, compared to just over $0.30 earlier in May, indicating that the spot market remains tight.

“The rally in flat price has been supported by strengthening in the prompt ICE Brent timespread,” ING stated, highlighting short-term supply constraints as a key factor behind the price movement.

Demand Expected to Strengthen in Summer

Looking forward, ING expects seasonal demand to rise during the summer months, which could keep prices relatively elevated in the short term.

“Expect demand to strengthen as we move into the summer months, suggesting prices should remain reasonably well supported.”

However, ING also cautions about a shift in the second half of the year, projecting the market may tip into a significant surplus by Q4, potentially applying downward pressure on prices.

Related Tredu Reads:

• WTI Crude Stalls at $62.50 as OECD Cuts Global Outlook
• What is Oil Backwardation and Why It Matters
• Summer Demand and Oil Price Seasonality