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Oil prices rose on Thursday to the highest level in nearly a month, after jumping 5% in the previous session, driven by increased demand forecasts from the International Energy Agency (IEA) and OPEC as major economies recover from the pandemic.
Brent crude was up by 16 cents at $66.74 a barrel by 0659 GMT, after reaching $66.94 earlier, the highest since March 18, and gaining 4.6% on Wednesday.
U.S. West Texas Intermediate futures rose 12 cents to $63.27 a barrel, earlier rising to $63.48, also the highest since March 18. The contract rose 4.9% in the previous session.
Supply discipline and rebounding economies are set to give oil a chance to break out of the recent range, Goldman Sachs analysts said in a report.
“We remain positive on Brent oil forecasting US$80/bbl in 3Q21 on a near-term demand recovery and supply discipline,” Goldman analysts said.
The U.S. investment bank also brought forward its predicted peak for global oil transport demand by one year to 2026, due to the rising penetration of electric vehicles as economies push for decarbonisation.
Even so, it does not forecast peak oil demand this decade due to growth in petrochemicals and aviation fuel markets, although it expects overall oil demand beyond 2025 “to be anaemic mainly due to electrification”.
Global oil demand and supply are set to be rebalanced in the second half of this year after the COVID-19 pandemic destroyed demand in 2020, the IEA’s monthly report said.
Producers may then need to pump a further 2 million bpd to meet the demand.
The Organization of the Petroleum Exporting Countries (OPEC), which has been withholding supply in tandem with other producers including Russia, this week raised its forecast for global oil demand this year.
OPEC expects demand to rise by 70,000 bpd from last month’s forecast and global demand is likely to rise by 5.95 million bpd in 2021, it said.
U.S. crude inventories were down by 5.9 million barrels last week, the Energy Information Administration (EIA) said on Wednesday, more than double analysts’ expectations for a 2.9 million-barrel decline. East Coast crude stocks hit a record low. [EIA/S]
“We see robust stock draws even after factoring in bearish risks as refinery runs are set to rise sharply in the coming months,” Citi Research analysts said in a note.
Gasoline supplied to the market last week, an indicator of U.S. consumption of the fuel, increased to 8.9 million barrels per day (bpd), the highest since August, the EIA report said.
