Oil records weekly gain as demand outpaces supply

Oil prices hit fresh multiyear highs to record a third straight weekly gain supported by a positive outlook for global demand as rising covid-19 vaccination rates in major consuming countries raised vehicular mobility.

Brent crude futures settled at $72.69 a barrel, rising 17 cents after reaching their highest since May 2019.

U.S. West Texas Intermediate (WTI) crude futures settled at $70.91 a barrel, up 62 cents, settling at their highest since October 2018.

Phil Flynn, senior analyst at Price Futures Group in Chicago, remarked that consumption appetite for oil is coming back faster than supply and more supply is needed to meet the rising demand.

The International Energy Agency (IEA) in its recently released monthly report said the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, would need to boost output to meet recovering demand set to reach prepandemic levels by the end of 2022.

“OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” the Paris-based energy monitoring organisation said.

U.S. investment bank,Goldman Sachs,said it expects Brent crude prices to reach $80 per barrel this summer as vaccine rollouts boost global economic activity.

Andy Lipow, president, Lipow Oil Associates,Houston noted that the rollout of covid-19 vaccine in North America as well as Europe is helping to restore demand at the same time that OPEC+ has reigned in production, pushing oil prices higher.

ANZ analysts also observed that the jet fuel market is showing signs of improvement, with flights in Europe rising 17 per cent over the past two weeks, an indication of oil’s strengthening demand.