Oil steady near $70 on hopes of demand recovery

Oil hovered near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

Benchmark Brent fell $0.14, or 0.2%, to $69.49 a barrel by 1321 GMT while US West Texas Intermediate crude was at $65.90 a barrel, down $0.12, or 0.01%.

Brent is on track to end the week flat after prices touched a 13-month high on Monday, following seven straight weeks of gains.

The Organisation of the Petroleum Exporting Countries (OPEC) forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain output curbs almost unchanged.

“The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its Covid woes,” PVM analysts said.

RBC Capital analysts said the fundamentals for summer gasoline were the most bullish in nearly a decade.

The United States, the world’s largest oil consumer, saw a big draw on US gasoline stocks last week as the winter storm in Texas disrupted refining output.

Sustained higher oil prices are expected to encourage US producers to increase output, which could eventually weigh on prices, JP Morgan analysts wrote.

JP Morgan expects US oil output to average 11.36 million bpd this year compared with 11.32 million bpd in 2020. Commerzbank expects oil to ease to about $60 during 2021.