Oil edges higher with Opec+ output talks in spotlight
Brent crude futures rise with demand growth seen outstripping supply
Melbourne — Oil prices rose on Friday, heading for a fifth straight week of gains, with demand growth seen outstripping supply on bets that Opec+ producers will be cautious in returning more output to the market from August.
US West Texas Intermediate (WTI) crude futures rose 8c, or 0.1%, to $73.38 a barrel at 2.16am GMT, headed for a 2.4% gain for the week.
Brent crude futures climbed 7c, or 0.1%, to $75.63 a barrel, headed for a 2.9% jump for the week.
Both benchmark contracts hit their highest since October 2018 on Thursday.
All eyes are on Opec+ who are due to meet on July 1 to discuss further easing of their output cuts from August.
"[The market] certainly has momentum behind it. It’s really in the hands of Opec+," said Commonwealth Bank commodities analyst Vivek Dhar.
On the demand side, the key factors Opec+ will have to consider are strong growth in the US, Europe and China, bolstered by vaccine rollouts and economies reopening, offset by rising Covid-19 cases and outbreaks in other locations, analysts said.
“The question is what does Opec+ do knowing that information. That’s going to determine where oil prices go,” Dhar said. “The risk is they end up being too conservative and we get [supply] deficit conditions past August.”
ANZ analysts predicted Opec+ would step up supply with a small increase of 500,000 barrels per day in August, adding to the 2.1- million they agreed to return to the market from May through July.
“We expect the Opec+ alliance will try to balance the market’s need for more supply against the fragile nature of the recovery in demand at next week’s meeting,” ANZ analysts said in a note to clients.
The prospect of sanctions being lifted on Iran and more of its oil hitting the market any time soon has dimmed, with a US official saying “serious differences” remain over a range of issues over Iran’s compliance with the 2015 nuclear deal.
Reuters