Oil prices widened the gains from the previous three sessions and rose nearly $1.50 a barrel on Thursday, on expectations that demand will outpace supply in the second half of the year as economies recover from the coronavirus crisis.
Brent crude rose $1.56, or 2.2%, to settle at $73.79 per barrel, while West Texas Intermediate (WTI) rose $1.61, or 2.3%, to $71.91 a barrel.
The expectation of a decrease in demand seems to be exaggerated, on the contrary, the market is tightening as demand does not decrease.
Members of the Organization of the Petroleum Exporting Countries and other producers, including Russia, collectively known as OPEC+, agreed this week to increase oil supplies by 400,000 barrels per day from August to December to calm prices and meet rising demand.
With demand outstripping supply in the second half of the year, all calculations were made by estimating that the global benchmark Brent would trade at mid-$70 per barrel for the remainder of 2021.
In the end, global GDP (gross domestic product) recovery is likely to stay on track, inventory data remains encouraging, balances are tight and OPEC is expected to remain in tune in the second half.
Russia may start the process of banning gasoline exports next week if fuel prices on domestic exchanges stay at current levels, Energy Minister Nikolai Shulginov said, further signalling tighter oil supplies ahead.
Crude stocks in the United States, the world’s largest oil consumer, unexpectedly increased by 2.1 million barrels last week to 439.7 million barrels, the first since May, according to data from the U.S. Energy Information Administration It reached 7 million barrels. Gasoline and diesel demand also increased last week.
US crude inventories are rising but continue to fall in Cushing. Inventories at the Cushing, Oklahoma crude oil storage center and the delivery point for WTI have fallen steadily for six weeks, hitting their lowest level since January 2020 last week. Supply fell another 1.3 million barrels, the lowest level since the start of last year, providing theoretical support to the WTI curve.
Some analysts optimistically expect global oil inventories to drop to pre-pandemic levels faster than expected, and are raising their 2021 oil price forecast to an average of $69 per barrel.
