Oil trades near $70 a barrel on improving demand outlook

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imageCommodities36 minutes ago (May 31, 2021 19:25)

© Reuters. FILE PHOTO: A diesel fuel nozzle with new European labels to standardise gasoline pumps in the EU zone is seen at a petrol station in Nice, France, October 12, 2018. REUTERS/Eric Gaillard/File Photo

By Nia Williams (NYSE:WMB)

CALGARY, Alberta (Reuters) -Oil prices firmed on Monday, with Brent trading near $70 a barrel on growing optimism that fuel demand will grow in the next quarter, while investors looked ahead to see how producers will respond at this week’s OPEC+ meeting.

Trading was thin as U.S. and UK markets were closed on Monday due to public holidays. Brent crude futures settled up 60 cents, or 0.9%, at $69.32 a barrel, off the a session high of $69.82. U.S. West Texas Intermediate crude rose 0.9% and last traded at $66.91 a barrel. Both contracts were set for a second monthly gain.

Analysts expect oil demand growth to outstrip supply despite the possible return of Iranian crude and condensate exports.

“Despite the mobility restrictions that are still in place, oil demand is recovering dynamically around the world,” Commerzbank (DE:CBKG) said.

Iran has been in talks with world powers since April, working on steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with the 2015 nuclear pact.

The Organization of the Petroleum Exporting Countries and allies including Russia will meet on Tuesday.

The group known as OPEC+ is expected to stay the course on plans to gradually ease supply cuts until July.

“Trading excitement often drives the market just before OPEC+ meetings, and there is confidence that the oil producer group will demonstrate supply restraint at its meeting on Tuesday,” Louise Dickson, oil markets analyst at Rystad Energy said in a note to clients.

A Joint Technical Committee (JTC) for the alliance kept its global oil demand growth forecast for 2021 unchanged at about 6 million barrels per day, two sources from the group told Reuters on Monday.

Separately, crude output in the United States soared 14.3% in March, the Energy Information Administration reported on Friday, while Baker Hughes data showed the number of oil and gas rigs in operation rose for a 10th month in a row last week.

Oil up, near $70 a barrel as demand outlook improves

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