Oil prices rose on Friday, with both gauges gaining more than 2% weekly. Brent, rose for the fourth month in a row, gained1.6% in July. However, WTI unchanged monthly.
Demand is growing faster than supply, and vaccinations are expected to mitigate the impact of a resurgence in COVID-19 infections worldwide.
Brent crude futures for September, which ended Friday, rose 28 cents, or 0.4%, to $76.33 a barrel. The more active contract for October the session closed by 31 cents higher at $75.41 a barrel.
West Texas Intermediate (WTI) crude futures rose 33 cents, or 0.5%, to close the session at $73.95 a barrel.
Despite rising coronavirus cases across the US, all of Asia and parts of Europe, analysts said higher vaccination rates will limit the need for harsh quarantines that depleted demand during the peak of the pandemic last year.
Watching the coronavirus factor, the oil complex predicts that demand will see only a modest decline compared to last year’s drop in consumption.
Analysts pointed to a rapid recovery following the COVID-19 surge in India’s gasoline consumption and industrial production as a sign that economies are more resilient.
Russian Deputy Prime Minister Alexander Novak said that oil consumption and demand are increasing worldwide.
US oil giants Exxon Mobil and Chevron, who have benefited from the tightness of the market, reporting earnings. Chevron said it expects to add at least one or two towers to the Permian basin in the third or fourth quarter, and international demand for most products other than jet fuel is starting to return to pre-pandemic levels.
According to data from energy services firm Baker Hughes, the number of US oil rigs has risen for 11 consecutive months, but has dropped to 385 this week. Big Oil does not increase spending on new wells and focus on debt reduction, supporting OPEC+’s plans to increase stable output.
OPEC+ is not losing market share against the US, which means the oil market is still intent on going much higher. OPEC oil production rose to its highest level since April 2020 in July as the group further eased production cuts.
U.S. crude oil production increased by just 80,000 barrels per day in May to reach 11.23 million barrels per day, according to an official monthly report.
Fueled by the global economic recovery and the slower-than-expected return of Iranian supply, oil prices are expected to trade around $70 a barrel for the remainder of the year. However, gains will continue to be limited with new coronavirus variants.
Saudi Arabia, the largest oil exporter, is expected to raise crude oil prices for the second month in a row for sales to Asia in September, according to commercial sources.
