Oil prices slightly exceeded $ 70 a barrel on Friday, as the International Energy Agency said global demand for oil would return to pre-COVID-19 pandemic levels by the end of this year. next year.
Producers will need to increase production to keep up with the recovery in demand, the Paris-based energy agency said in its June oil market report. He predicts that demand will increase in 2021 before growing at a faster rate next year, reaching 100.6 million barrels per day (mb / d) by the end of 2022.
The market “cannot ignore the clear bullish signal” from the IEA report, in which the IEA calls for more oil to be produced by OPEC +, the Organization of the Petroleum Exporting Countries and their allies, “to respond to the recovery in oil demand in 2022, ”said Louise Dickson, oil markets analyst at Rystad Energy.
“OPEC + ‘s supply conservatism has supported oil prices since last year and is the reason prices have now reached such highs,” she said in a daily note. “There is certainly room for OPEC + to ramp up production from the second half of this year and until that happens there is clear potential for oil prices.”
In Friday trades, West Texas Intermediate crude for delivery in July
rose 46 cents, or 0.7%, to $ 70.75 a barrel on the New York Mercantile Exchange, heading for a weekly rise of about 1.7%.
First-month WTI prices ended at $ 70.29 on Thursday, the highest level since October 2018, according to Dow Jones Market Data.
August Brent rough, the world benchmark
added 30 cents, or 0.4%, to $ 72.82 a barrel on ICE Futures Europe. Brent, which closed at $ 72.52 a barrel Thursday, the highest since May 2019, was on track for a weekly rise of more than 1%.
The IEA said that after the record 8.6 mb / d drop in 2020, global oil demand is now expected to rebound by 5.4 mb / d in 2021 and an additional 3.1 mb / d in 2022. regions, but across sectors and products. While the end of the pandemic is in sight in advanced economies, slow vaccine distribution could further jeopardize recovery in non-OECD countries, ”he said.
The IEA also said that it was possible for OPEC + to increase production by 1.4 mb / d above its target from July 2021 to March 2022. “Our first detailed review of the 2022 balances confirms the past expectations that OPEC + must turn on the taps to ensure adequate supplies to global oil markets. “
Earlier this month, OPEC + agreed to maintain its current plan to gradually ramp up oil production until July, sending crude oil futures to their highest levels in more than two years. . Its next meeting will take place on July 1.
There were still a number of factors that could affect how quickly OPEC + can reverse its pandemic-induced production cuts, the IEA said. “The pace at which the OPEC + cuts can be reversed will depend not only on the success in containing the spread of the virus and the growth in demand, but also on the timing of the eventual return of Iranian barrels to the market.”
The Energy Information Administration on Wednesday reported a weekly jump in US gasoline inventories and a drop in implied demand for fuel.
“The recent decline in demand may intensify as the summer driving season progresses and increased economic activity supports demand for distillates,” Marshall Steeves, market analyst for distillates, told MarketWatch. energy at IHS Markit. “The recovery of the US economy should always be the engine of global growth as a whole.”
“US crude inventories are below normal at a four-month low and could tighten further as demand is expected to rise over the summer,” he said.
Meanwhile, “Iran is a wild card, depending on the outcome of the nuclear talks,” Steeves said. “If successful, another million bpd of exports could result, and OPEC should respond.”
Among the petroleum products traded on Nymex gasoline on Friday July
fell 1.1% to $ 2.19 per gallon, forecast for a weekly drop of 1% for the week, while heating oil in July
lost 1.1% to $ 2.12 a gallon, trading almost flat from the end of the week.
July natural gas
however, rose 3.7%, to $ 3.27 per million British thermal units, with prices up more than 5% for the week.
The EIA on Thursday reported a 98 billion cubic foot increase in U.S. fuel supplies last week, beating the first-year average for the period, said Christin Redmond, commodities analyst at Schneider Electric.
But “with record high temperatures expected for parts of the western United States over the next two weeks, this trend could be reversed as higher cooling demand results in higher demand for gas from gas generators. ‘electricity,’ she said in a market update.
Barbara Kollmeyer in Madrid contributed to this report.