Economic recovery: Oil prices move to $72/barrel
By Uthman Salami
A poll conducted by Reuters has indicated that oil prices will experience a gradual upward change this year as Crude oil price closed in on the $72 mark a barrel on demand optimism.
The American Western Texas Intermediate (WTI) rose by 0.55per cent to close at $69.21 per barrel on Thursday morning, the Bonny light crude rose by 1.12per cent to close at $70.15 per barrel while the OPEC basket rose by 0.70per cent to close at $69.01 per barrel.
Oil prices were trading up on Wednesday afternoon, on green signals from OPEC whose members have agreed to stick to its output plans for the coming month.
This steady ease of oil supply cut by OPEC+, coupled with a dearth of developments regarding the Iran/U.S. nuclear deal, has successfully instigated a steady grow of oil price.
Crude oil prices strengthened further during the week after OPEC+ signalled its growing optimism about the balance between demand and supply, and confirmed that it planned to continue increasing production.
Meanwhile, projections were hinged on three major variables namely; economies recovery as well as positive light from the coronavirus crisis in India and a potential return of Iranian supply.
Projections had suggested that 45 participants forecast that Brent would average $64.79 per barrel -the sixth straight upward revision in the 2021 consensus up slightly from April’s $64.17 projection.
Global demand was seen growing 5-7 million barrels per day in 2021, however, concerns were raised over shrinking consumption in the world’s third-largest consumer, India, who has been under heavy attack from a second wave of the COVID-19 virus.
Some analysts believe the impact might be limited. A research expert, Hetal Gandhi, said “we do not expect any significant decline (in prices), as fall in demand from India would be offset by an increase from countries like the U.S. and China,”
Iran and global powers have been negotiating since April to lift sanctions on Tehran, including its energy sector.
Any increase in Iranian supply will top barrels of productions already expected from OPEC+, which plans to bring back about 2 million bpd through July.
Most analysts expect OPEC+ to stick to the existing strategy of gradually easing supply curbs during its meeting on Tuesday.
Projections also forecast U.S. crude to average $61.68 in 2021 versus $61.01 in April.
