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Oil prices nearing $70 as demand outlook improves

oil prices high record

Oil prices are nearing $70 per barrel this Monday, as the demand outlook improves, and as investors look forward the OPEC+ meeting of next week in which new production goals will be accorded.

Firstly, Brent crude rose 50 cents, 0,7%, and closed at $69,22 per barrel, after settling at their highest in two years on Friday; while the US crude, the West Texas Intermediate (WTI) was up 55 cents, 0,8%, and closed at $66,87 per barrel.

Secondly, both contracts are on their way to set a new record for gains; particularly a second monthly gain, as analysts expect future oil demand to improve; as vaccination keeps spreading around the world, consequently easing lockdowns.

Thirdly, the improved demand is also possible, even though the possible return of Iranian oil after the arrangement of its nuclear deal. In fact, Iran has been in talks with world powers since April; working on steps that Israel and Washington must take on sanctions and nuclear activities to return to full compliance with the 2015 nuclear pact.

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Oil prices could boost after OPEC+ meeting

Moreover, ANZ analysts said, quoted by the Business Times that they “see demand outstripping supply¡; in the order of 650,000 barrels per day (bpd) and 950,000 bpd in Q3 and Q4 respectively.” They added this includes a 500,000 bpd of increase in Iranian output.

In addition, the Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia (OPEC+) will meet on Tuesday; during the meeting they intend to gradually ease production curbs until July.

Furthermore, Energy Aspects analyst Virendra Chauhan said. “We don’t think Iran derails any arrangement with Opec+; hence the already agreed unwinding of cuts from July are expected to continue; and are already baked into balances.”

Finally, the crude output by the United States soared 14,3% in March; while Baker Hughes data showed oil and gas rigs rising for a 10th month in a row last week; which also increases the demand outlook.

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