Oil Prices Rise; Doubts Over 'Oil Glut' Narrative
Benchmark Brent traded near $67 a barrel, up more than a dollar from the previous close and broadly unchanged from early April levels, when OPEC+ first unveiled monthly supply increases totaling 2.2 million barrels per day (mbd). Over the weekend, the group announced a fresh plan to raise output by 137,000 barrels per day (bpd) in October as part of its broader strategy to add 1.65 mbd.
Following the move, Goldman Sachs raised its surplus forecast to 1.9 mbd and projected Brent to fall to $53-56 next year, while an S&P Global executive said prices could drop to around $55 by year-end under the weight of higher OPEC+ supply, according to agency reports.
Yet prices remain resilient. Analysts say actual OPEC output is lagging targets and China's aggressive stockpiling is absorbing much of the excess, helping keep the market tight."The dominant narrative has been one of a massive 'oil glut', but one in which stocks have not been building in the most visible locations and one in which the market remains in backwardation," Bassam Fattouh and Andreas Economou wrote in a recent report for The Oxford Institute for Energy Studies. "The common view is that the oil glut is being translated in the buildup of stocks in non-OECD, mainly in China, one of the least transparent locations in the world. But many uncertainties remain around how big these increases are."
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