Oil bounces above $ 67 as demand optimism trumps Iran supply concerns
Oil extended gains from the highest close in more than two years as optimism over rising demand from the United States outweighed fears Iranian supplies would increase if sanctions on exports official were lifted.
West Texas Intermediate rose 0.5% in early trade in Asia after stabilizing at the highest level since October 2018. With the recovery of the US economy after the pandemic, more and more drivers taking to the roads and with declining stocks, the most active prices in New York are on track. for a sixth consecutive daily advance.
This positive image is clouded, at least for now, by fears that talks in Vienna between Tehran and world powers to revive a nuclear deal pave the way for the lifting of US sanctions. If a deal is struck, Iranian crude shipments could increase just as the Organization of the Petroleum Exporting Countries and its allies relax collective restrictions on exports.
Oil is on track for another monthly gain in May, the fourth of five this year, as investors bet progress in tackling the Covid-19 pandemic will boost energy use. The recovery is most evident in the United States, Europe and China, as waves of viruses continue to rock economies in parts of Asia and Latin America. The rally in crude is part of a larger progression in commodities.
- WTI for July delivery rose 0.5% to $ 67.18 a barrel on the New York Mercantile Exchange at 8:52 a.m. in Singapore.
- Prices have gained more than 5% this week, the most since mid-April.
- Brent for the July settlement added 0.2% to $ 69.62 a barrel on the ICE Futures Europe exchange.
- Brent’s quick time spread was 22 cents per barrel declining, an uptrend with near-term prices above those further afield.
The upturn in demand in the United States, assisted by a vaccine, precedes the summer driving season, which begins from the upcoming Memorial Day weekend. Data this week showed a drop in crude and gasoline inventories, and that drivers are driving almost as many kilometers on the highways as in 2019.
The ministers of the OPEC + alliance, led by Saudi Arabia and Russia, are due to meet on June 1 to assess the world market and their production policy. All but four analysts and traders surveyed by Bloomberg predicted they would ratify an 840,000 barrels-per-day hike scheduled for July, completing a three-step process to raise to just over 2 million barrels this summer.
The positive market outlook is reflected in the widening of long-term WTI spreads. The US benchmark price for December 2021 was $ 4.93 per barrel higher than that of the same month’s futures in 2022. The spread widened by nearly $ 1 this week to reach its highest level since mid-March.