Supply expected to tighten due to wildfire in Canada and declining lower 48, while demand stays strong.

Diminished supply due to outages has nearly balanced the market as demand remains healthy.

The ongoing low oil price environment is the underlying cause of many OPEC supply disruptions.

At tomorrow's OPEC meeting, we do not look ahead for any action to be taken. Not much has changed since Saudi Arabia scuttled the draft freeze agreement (that excluded Iran) in Doha, at the direction of Deputy Crown Prince Mohammed bin Salman.

Our view is that it will be difficult for Saudi Arabia and Iran, along with the rest of OPEC, to agree on anything next week. In addition, crude prices have been strong in recent weeks, so there is not much incentive for OPEC members to work hard to agree on any action, such as a freeze that includes Iran. Moreover, there is actually a risk to agreeing on such a measure.

If a freeze that includes Iran were agreed, and if it pushed up prices due to more bullish market sentiment, prices might get “too high, too quickly”.

Similar to the failed Doha agreement, we do not think a freeze would have any impact on actual crude production. A surprise freeze cannot be entirely ruled out, but we consider it to be a low probability “tail risk”.

Oil markets continue to be driven by disruptions and by expectations of a balanced global market in the second half of this year.

During Europe trading sessions, crude oil for July delivery on the NYME shed 80 cents, or 1.62%, to trade at $48.30 a barrel.