Brent ends two-year high as demand outlook thwarts supply fears
By Jessica Resnick-Ault
NEW YORK (Reuters) – Oil prices ended the week up more than 5%, with global benchmark Brent edging up on Friday to stabilize at a two-year high, strong US economic data and expectations of a rebound in global demand outweighing concerns about more supplies from Iran once sanctions are lifted.
Brent settled 17 cents or 0.2%, higher at $ 69.63 per barrel, its highest close since May 2019. US West Texas Intermediate crude stabilized at 53 cents per barrel, or 0, 79% to $ 66.32.
“On the strength of good economic data and investor risk appetite in financial markets, Brent is making a new bid for the psychologically important $ 70 a barrel bar,” said Eugen Weinberg, analyst at Commerzbank.
“Concerns over demand due to the pandemic are giving way to optimism about the rapid return of consumers,” he added.
Analysts expect global oil demand to rebound closer to 100 million barrels per day in the third quarter on summer trips to Europe and the United States following widespread COVID vaccination programs -19.
“Demand for gasoline has now exceeded 2019 levels in many areas,” ANZ analysts said in a note.
Strong economic data from the United States, the world’s largest economy and oil consumer, also supported the number of Americans filing new claims for unemployment benefits, falling to the lowest since mid-March 2020 , exceeding estimates.
Rising coronavirus infections in Asia are putting pressure on prices. Infections in the South Asian region topped 30 million on Friday, according to a tally from Reuters, led by India, which is grappling with a second wave of COVID-19 and a shortage of vaccines in the region .
The prospect of more Iranian oil entering the markets also capped the gains.
“Iran is going to slow the rally,” said Bob Yawger, director of energy futures at Mizuho in New York City, adding that market participants were cautious as the weekend approached on the possibility that ‘an agreement between Iran and the Western powers can inject more. supply to the market.
Iran and world powers have been negotiating in Vienna since April to determine what steps Tehran and Washington need to take on sanctions and nuclear activities to return to full compliance with the 2015 Iranian nuclear pact with world powers.
In the United States, Yawger said demand potential for this Memorial Day holiday weekend was lackluster. “There are areas of concern,” he said.
More than 34 million Americans are expected to take the freeways between May 27 and May 31, the holiday weekend that marks the start of the summer driving season. But they face gasoline prices at around $ 3.04 a gallon on average, the most expensive since 2014.
Also in the United States, crude production jumped 14.3% in March to 11.2 million barrels per day, after being hit by a cold snap in February, the government said in its latest monthly report. . The number of oil rigs, an early indicator of future production, has increased for nine consecutive months, according to energy services firm Baker Hughes. [nL2N2NF1TD][RIG/U]
By balancing expectations of a recovery in demand against a possible increase in Iranian supply, the Organization of the Petroleum Exporting Countries and its allies, including Russia, a group known as OPEC +, should stick to the current pace of gradual easing of oil supply at a meeting on Tuesday, OPEC sources said.
(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Florence Tan in Singapore; Editing by Marguerita Choy and Louise Heavens)