Oil prices climbed on Thursday, as Brent sits just below $72 a barrel and WTI reached 2-year-high level, boosted by the estimates that the demand will recover in the second half of the year and by robust recovery signals especially from the US, Europe and China.
International benchmark Brent crude was trading at $71.71 per barrel at 07.14 GMT for a 0.50% gain after closing Wednesday at $71.35 a barrel.
American benchmark West Texas Intermediate (WTI) was trading at $69.14 a barrel at the same time with a 0.45% increase after ending the previous session at $68.83 per barrel. This is the highest level since Oct. 18, 2018 when it traded at $70.03.
The expectations for a tighter market in the second half of the year is being cemented by data coming from the US and China while the easing restrictions especially in Europe is also supporting the prevailing positive sentiment for the last few days.
Late Tuesday, the American Petroleum Institute (API) announced its estimate of a fall of 5.36 million barrels in US crude oil inventories relative to the market expectation of a draw of 2.1 million barrels.
The forecast of a larger inventory draw signals a recovery in crude demand in the US, easing investor concerns about declining demand, supporting prices.
Another clear sign on the path of demand recovery comes from the EU region as, according to the World Health Organization, 44% of EU adults have now received at least one dose of vaccine and many European countries plus the UK have lifted restrictions ahead of the tourism season. They allow conditional domestic or international travel, some with quarantine, some with negative COVID-19 test or vaccine certificate.
The International Energy Agency said it expects global oil consumption to return to pre-pandemic levels in a year, which is faster than many market participants predict.
“Demand in one year or so may well come back to the levels of before the crisis,” IEA executive director Fatih Birol said in an interview on Bloomberg TV.
Birol also confirmed that there’s a strong recovery in progress in the US, China and Europe.
The oil prices found more upward support after the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on sticking to the previously-determined production quota, which cemented the group’s estimates for a stronger demand in the second half of the year.
By Sibel Morrow