Here comes the calvary

Commentary summary:

• OPEC+ promises to deliver more supply than expected in August amidst most market indicators flashing warning signs on supply.

• Time spreads, FOB premia and inventory levels all point to needed supply injection – flat price hasn’t yet joined the party.

• Medium/Heavy supply looks to be arriving just in time with resid already looking tight and possible LatAm heavy crude outages looming.

• USGC pricing is indicative any issues related to ultra-low Cushing inventories appear to on hold – with market now solving for USGC inventory drain.

• Sparta signals highlighting WTI is pricing relatively quite cheaply globally – not sustainable with tight (and tightening) USGC balances.

Following the first meeting since the escalation of Israel–Iran hostilities, OPEC+ signalled its intent to push supply more aggressively in August (>500 kb/d) than the market had expected, and is now approaching a full unwind of the voluntary 2.2 mb/d curtailment.