Brent boosted its earnings on Friday to surpass $72 for the first time since 2019, amid concerns over COVID-19 vaccine implementations, OPEC+ supply discipline and rising demand data.
The Organization of the Petroleum Exporting Countries and its allies said on Tuesday they would adhere to the agreed supply restrictions.
The weekly supply report released Thursday showed US crude inventories fell more than expected last week.
Oil boosted gains after nonfarm U.S. employment figures showed an increase of 559,000 last month. The US dollar weakened after the report, making oil cheaper for holders of other currencies and supporting oil prices.
Brent crude was up 58 cents, or 0.8%, to settle at $71.89 a barrel. During the session, it hit $72.17, its highest level since May 2019.
West Texas Intermediate (WTI) crude rose 81 cents, or 1.2%, to $69.62. The session high was $69.76, the highest since October 2018.
Brent rose about 3% for the week, while US crude gained about 5%. Second week earnings recorded for both contracts.
Oil prices rose after US energy firms cut the number of oil and gas wells operating this week for the first time in six weeks.
The summer driving season and the reopening of the global economy are bullish for oil demand in the second half of the year.
Energy markets are locked in the Iran nuclear talks, which should start next week. Another factor that boosted oil this week was the slowing of talks between the US and Iran over Tehran’s nuclear program, as it dampened expectations for the return of Iran’s oil supply.
The fifth round of negotiations will heat up next week. Oil prices are likely to be bolstered as Tehran will stick to its red lines to restore the nuclear deal.
Meanwhile, US crude production is likely to grow more slowly than expected as shale oil producers add only a limited number of rigs to boost output and instead choose to press for higher prices and profits.
Increasing fuel demand and the rapid pace of vaccines in countries such as the United States support the oil market, while low vaccination and high infections in countries such as Brazil and India have the opposite effect.
Not all countries in the world are in a full recovery mode yet, but there is currently nothing to reverse the upward momentum initiated by strong summer demand.
