The latest bearish developments in global oil markets invalidates the earlier requests from both the White House and the International Energy Agency (IEA) for OPEC+ to boost oil output. Certainly, the cautious approach of OPEC+ that was taken in July proved to be right, gradually increasing output monthly by 400,000 barrels per day (bpd) until the end of 2021. This will most likely lead OPEC+ to continue its careful strategy of output cuts when producers meet in early September, without output changes of withholding 5.8 million bpd until the end of 2021. The latest bearish news from the drop in commodity markets have weighed down on oil market sentiments and pushed oil prices down, despite the huge draws in OECD oil inventories and the relevant strength in the physical oil markets. The oil market is under downward pressure after prices made a huge weekly drop to the lowest level since April, down by about $5 a barrel for both benchmarks Brent and WTI and recording a more than 7 percent weekly loss, as a result of the huge drop in commodities markets. The steep downward momentum of oil prices was entirely attributed to oil demand concerns but it should also be attributed to the massive drop in commodities that went lower, reacting to news from the Federal Reserve of a potential withdrawal of monetary support, sending the stock market down and hitting all commodities. Oil is, of course, in the basket of commodities. The Federal Reserve"s meeting papers were released. What transpired is that there is talk about the end of tapering in 2021 to lower inflation, this means keeping the interest rate unchanged for 2021 at least. Although there is no massive change in the physical oil markets during the end of the high demand season for gasoline, it is very interesting that in 2019, before the pandemic, global demand was higher but the WTI price was trading at around $55 per barrel and the market was not as pressured as it has been in recent weeks. Such bearish developments tell us that OPEC+ is right and the market does not need more crude with the end of the peak gasoline driving season approaching. Faisal Faeq The market is full of so many versions of bearish news and has been under pressure after some countries re-imposed travel restrictions. The only bullish factor is oil companies’ financial results, but apparently this has been brushed off by investors after the drop in commodities markets. Such bearish developments tell us that OPEC+ is right and the market does not need more crude with the end of the peak gasoline driving season approaching. Though it is natural to see a drop in consumption with gasoline demand likely starting a seasonal trend lower, the huge draws in crude inventories tell us otherwise as the US is the main driver for the global gasoline market. Two years ago, before the pandemic, global oil demand was about 100 million bpd and the reported data for OECD commercial oil inventories was at 67 million barrels above the latest five-year average. In Aug. 2021, the latest reported data for OECD commercial oil inventories was at 90.4 million barrels below the latest five-year average. Hence, the downward pressure on the oil market is driven by sentiment only while fundamentals remain strong. The IEA reported that US crude exports rebounded to a four-week high at 3.43 million bpd but, as traders assessed the fundamentals with respect to the demand risk, the slight increase in shale oil is not the factor that worries the markets as US output is still around 11.4 million bpd, while the US rig count is at its highest level since early April 2020. On the other hand, US oil demand has surpassed pre-pandemic levels at 21.46 million bpd. Concisely, the latest downward pressure on oil markets serves the output cuts strategy of OPEC+ very well, taking a cautious approach. • Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter: @faisalfaeq Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News" point-of-view