Oil prices increase as global inventories drop

Oil prices crept higher on Friday and were on course for a fifth continuing weekly gain. This was due to expectations that demand increase would exceed supply, and OPEC+ producers would be careful in returning more product to the market from August.

Brent was up 4 cents, or 0.1%, at $75.60 a barrel at 0854 GMT. It was going for a 2.8% jump for the week.

U.S. West Texas Intermediate (WTI) crude was up 1 cent, or smaller than 0.1%, at $73.31 a barrel. It went for a 2.4% weekly increase.

Both benchmark contracts ended at their highest levels after October 2018 on Thursday.

Oil prices have been sustained in recent weeks, serving from the ongoing slump in global oil inventories as oil demand grinds higher. Nevertheless, unevenly stated UBS analyst Giovanni Staunovo.

With enormous oil inventory drops ahead, they expect oil prices to keep moving higher throughout 3Q21, he added. By this, he was referring to the third quarter of this year.

Oil also received some support on Friday. The support of a U.S. infrastructure bill increased optimism over the energy demand outlook.

OPEC+ meeting ahead

All eyes remain on the Organization of the Petroleum Exporting Countries, Russia and partners – together described OPEC+. They are expected to meet on July 1 to review the further easing of their production cuts from August.

The producer group has enough space to increase supply without hindering the drawdown in oil stocks, given the more favorable demand outlook, stated Stephen Brennock of oil broker PVM.

On the demand side, the key factors OPEC+ will have to contemplate are strong growth in the United States, Europe, and China, supported by vaccine rollouts and economies reopening, as stated by analysts who said growing coronavirus cases countered this and outbreaks in other places.

The prospect of sanctions on Iran being raised and more of its oil hitting the market anytime soon has dimmed, with a U.S. official stating severe differences remain over a range of concerns over Tehran’s compliance with the 2015 nuclear deal.