The Brent oil price is back to square one after the OPEC+ meeting on 2 June caused a dip. The unwinding of voluntary production cuts was announced, with the disclaimer that implementation will only take place if market conditions allow. The OPEC+ market share and market balance will be a priority in this regard, possibly at the expense of price. Balancing supply and demand in the oil market – OPEC+’s official goal – will become increasingly difficult in the future, at least if the IEA models are to be believed. In our view, however, the energy agency’s static supply and demand projections are unlikely to come true.
In addition, this Market Update also analyses the ECB and Fed policy meetings. Where the ECB decided to cut interest rates, deposit rates in the US remain unchanged. There is a trade-off here, as different interest rates lead to a stronger dollar, which in turn could lead to more inflation in Europe via energy prices.
In the gas market, increased competition for LNG and plant maintenance gives upward price pressure. At the same time, upward price pressure is lagging, mainly due to high gas stocks. The filling rate does slow down, a logical consequence of globally high LNG demand and relative calmness in the market.