Oil posted a fourth straight weekly gain as signs of a global demand recovery and supply discipline among producers encouraged investors.
West Texas Intermediate (WTI) for July delivery on Friday rose 0.84 percent to US$71.64 a barrel, up 1.03 percent from a week earlier.
Brent crude for June delivery increased 0.59 percent to US$73.51 a barrel, gaining 1.13 percent on the week.
Photo: Reuters
US demand growth is being passed on to Europe and emerging markets, where India is also starting to show improvements, Goldman Sachs Group Inc said.
In a Bloomberg Television interview on Friday, Energy Aspects Ltd founder and director of research Amrita Sen said that the oil market could see an “incredibly” tight summer, and earlier this week, Morgan Stanley boosted its crude price forecasts.
Prices are continuing to be supported by OPEC+ producers’ discipline in returning supply to the market.
“We continue to expect a demand rebound in the second half of the year,” TD Securities head of commodity strategy Bart Melek said. “We’re seeing vaccine programs being rolled out in earnest around the world, and much of America is already opening up as the driving season is starting.”
Oil has rallied nearly 50 percent this year with widespread vaccinations boosting demand, while the OPEC and its allies have been cautious about returning shuttered supply to the market. Shale producers in the oil-rich Permian Basin have been largely holding back, too.
The US is pumping about 1.9 million fewer barrels a day since COVID-19 caused prices to tumble last year, a reduction that is bigger than Nigeria and Venezuela’s production combined.
“The proof is in the pudding,” Again Capital LLC partner John Kilduff said. “We haven’t seen a real strong rebound in Permian activity, and we’re continuing to watch pipelines out of that area be underutilized.”
Global oil demand has likely hit 97 million barrels a day recently, up from 95 million a few weeks earlier, Goldman Sachs said.
Consumption before the COVID-19 pandemic stood at about 100 million barrels a day.
The bank said oil is its “highest conviction” bullish call in commodities.
Earlier in the session, WTI crude’s discount to the global benchmark narrowed to less than US$2 a barrel for the first time since November last year.
The spread has shrunk significantly in the past few weeks on signs of higher US refining throughput and continued supply discipline by US producers.
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