DUBAI: Oil hit a 32-month high in early morning trading on Monday as countries across the globe speed up vaccination programmes to control the spread of the coronavirus pandemic and reopen economies.
Brent, the international benchmark for more than half of the world’s crude, rose 0.48 per cent to $73.04 per barrel at 10:30am UAE time. West Texas Intermediate, the key gauge for US oil, was up 0.42 per cent at $71.21 per barrel, report agencies.“Benchmark crude oil futures opened buoyant in Asia [on] Monday with carryover strength from the previous week,” Avtar Sandu, senior manager of commodities at Singapore-based Phillip Futures, said in a note.
Oil prices are finding support “after the International Energy Agency (IEA) on Friday predicted that global oil demand will recover to pre-pandemic levels by late 2022,” he said.
Opec also left its outlook for global demand growth unchanged for the second consecutive month amid easing mobility restrictions. Oil demand is expected to grow at 6 million bpd with total consumption expected to hit 96.6 million bpd this year, Opec said in its monthly oil markets report on Thursday.
“GDP growth rates in the second half of 2021 are forecast to significantly exceed that of the first half of 2021,” Mr Sandu added. “The ongoing fiscal stimulus in the US, amounting to almost $3 trillion, or more than 3 per cent of global GDP, is one very important supporting factor, as well as China’s effort to push its economy forward.”
Countries across the globe are ramping up vaccination programmes and more than 2.35 billion doses have been administered across 178 countries as of Monday, according to data collected by Bloomberg.
Iraq’s oil minister Ihsan Abdul Jabbar expects oil to trade in the range of $68 to $75 per barrel in the second half of this year.Crude prices will remain in this range if Opec and its allies continue to cut production to support markets, Mr Jabbar told reporters in Baghdad on Saturday.
Demand for jet fuel is also expected to rise as countries reopen borders, according to a report from Kuwait’s Kamco Invest.
Earlier this month, Opec and its allies voted to stick with the current plan of bringing 2 million bpd of output to the market, despite the prospect of a return of Iranian barrels if sanctions lift.
“As the economy continues to recover from coronavirus, Opec and its allies will need to increase supply to meet the surge in consumer demand,” Naeem Aslam, chief market analyst at Avatrade, said.
“Having said that, traders should keep in mind that the ongoing nuclear deal negotiations between the US and Iran are likely to take effect soon. Iran is in a strong position to increase its oil supply in a relatively short period of time, which could result in a significant retracement of global oil prices.”