Oil prices settled primarily unchanged on Monday, after scoring their highest levels in more than two years.
Rising U.S. crude production and Britain’s slowed coronavirus reopening discouraged expectations for fuel demand growth and tighter supplies.
The market responded negatively to a U.S. Energy Information Administration (EIA) estimate that shale oil production, which values more than two-thirds of U.S. production, was supposed to increase by approximately 38,000 barrels per day (bpd) in July 7.8 million bpd.
We began firmly on expectations that the demand situation was growing momentum as coronavirus vaccinations were high, stated Phil Flynn, senior analyst at Price Futures Group in Chicago. Then the EIA report noted the winds out of the sail.
Brent ended up 17 cents at $72.86 a barrel. Earlier in the session, it touched $73.64 a barrel, its biggest after April 2019.
U.S. West Texas Intermediate dropped 3 cents to end at $70.88 a barrel, after earlier reaching $71.78 a barrel, its highest after October 2018.
On Friday, the International Energy Agency announced that it anticipated global demand to return to pre-epidemic levels at the end of 2022, more quickly than beforehand expected.
The IEA prompted the Organization of the Petroleum Exporting Countries and partners, identified as OPEC+, to raise production to meet demand.
OPEC+ has been handling production from raising prices after the epidemic wiped out demand in 2020, having substantial compliance with agreed targets in May
Motor vehicle traffic is responding to pre-epidemic levels in North America and much of Europe. More planes are in the air as anti-coronavirus lockdowns, and other limitations are being lifted.
Nevertheless, Britain, late Monday, suspended plans to lift most remaining coronavirus restrictions by a month because of the speedy spread of the more infectious Delta variant.
Heavy maintenance seasons in Canada and the North Sea also have supported prices, said Rystad Energy analyst Louise Dickson. The firm expects that around 330,000 bpd of oil and condensate supply are offline at Canada oil sands projects and added 370,000 bpd offline in the North Sea.