Oil commentary - 21 April 2021

Morning all and welcome to the day after the night before a year ago that was negative oil day. Confused? So am I. On that note…. Brent is trading down 0.13 this morning at $66.44 and WTi is trading at $62.49 down 0.18. Where to begin? Do we talk about the European super league? What European super league? No, and to be honest with what is going on in India it is actually a very difficult market to comment on right now. I also don't want to sound negative or depressing, god knows we all need a bit of positivity at the moment but when I look at the oil market and its blatant ignorance as to the devastation that is the second wave of Covid-19 that India is in the midst of trying to fight I honestly have no words. If we look at things right now, then the facts are not going to lie. We have more supply coming back from OPEC+ in May, that's pretty much nailed on. Iran are edging ever closer to an agreement with the USA, this could bring back another 1mn bpd on top of the 700kbpd, perhaps some time in Q2 even. And then we have India, the worlds third largest importer and consumer of crude oil, with localised lockdowns. Refining runs already being cut owing to these lockdowns and it's rumoured 15 - 20% of Indian demand could take a hit over the next three months. India daily oil demand is roughly 5mnbpd. So, again we do this tricky math, and we work out that 1.7 mn bpd of production back roughly if the JCPOA is signed and 1mn bpd hit to demand. Yet here we are, with Brent structure 3 dollars per barrel backwardated until the end of the year. Look, the path to demand recovering was never going to be like driving down the Stelvio Pass. It was going to be bumpy but I'm sorry this is more than a bump, this is like trying to climb the Matterhorn wearing jelly sandles. I sense a correction coming and maybe EIA data evidencing builds in crude stocks will be that final negative headline the market just can't ignore. But what do I know, I was looking forward to ESL football. Good day.