(Bloomberg) Oil traded near the highest close in more than two years as optimism over burgeoning demand — particularly in the U.S. — outweighed concern that Iranian supplies will jump should sanctions on exports be lifted.West Texas Intermediate rose 1%, following positive sentiment across markets. Still, prices have been stuck in a $10 range since March, and volatility on the global Brent benchmark has fallen to its lowest level since last August.Crude’s next cue may come when the Organization of Petroleum Exporting Countries and its allies meet next week. Delegates have said the alliance, led by Saudi Arabia and Russia, looks set to rubberstamp oil-output increases.
With the U.S. economy recovering from the coronavirus pandemic, more drivers are taking to the roads and stockpiles are drawing. Monday marks Memorial Day, giving Americans a long weekend that sees the start of the summer driving boom.
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Yet that positive market picture is clouded, at least for now, by concerns that international talks on reviving the Iran nuclear accord will pave the way for increased oil supplies from the country. Meanwhile, the threat of virus variants and fresh outbreaks in parts of Asia continue to curb demand in some regions.
“Traders are eyeing a bullish summer for oil even with Iran’s return to the party,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “This month can be summed in one word: hesitation.”
Prices:
WTI for July delivery advanced 1% to $67.49 a barrel at 9:09 a.m. in New York
Prices are on track to gain more than 5% this week, the most since mid-April
Brent for July settlement, which expires Friday, was up 46 cents at $69.92 a barrel
Ministers from the OPEC+ alliance are set to meet on June 1 to assess the global market and their production policy. All but four of 24 analysts and traders surveyed by Bloomberg predict they’ll ratify an 840,000-barrel-a-day increase scheduled for July, completing a three-part process to revive just over 2 million barrels this summer.
The market’s positive outlook is reflected in WTI’s longer-term spreads. The price of the U.S. benchmark for December 2021 was as much as $5 a barrel higher than futures for the same month in 2022. The differential has expanded by almost $1 this week to hit the highest since mid-March.
Related coverage:
Saudi Aramco may increase the official selling price of its flagship Arab Light crude by 10 cents a barrel for July sales to Asia, according to a Bloomberg survey of traders and refiners.
Combined exports of the key North Sea grades Brent, Forties, Oseberg, Ekofisk and Troll — or BFOET — will rise to 755,000 barrels a day in July, according to Bloomberg calculations from loading programs.
China’s efforts to rein in surging commodities prices are likely to be in vain as it’s lost the ability to boss the market around, according to Goldman Sachs Group Inc.
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