Oil trades near $70 a barrel on improving demand outlook
OPEC+ is expected to stay the course on its plans to gradually ease supply cuts until July. PHOTO: REUTERS
Oil prices firmed on Monday, with Brent trading near $70 a barrel, underpinned by the bright outlook for fuel demand growth in the next quarter, while investors looked ahead to the OPEC+ meeting this week to see how producers will respond.
Brent crude futures rose $0.69, or 1%, to $69.41 a barrel by 0955 GMT, after reaching a session high of $69.82. US West Texas Intermediate crude was at $67 a barrel, up $0.68, or 1%.
US and UK markets are closed on Monday due to public holidays.
Both contracts are on track for a second monthly gain as analysts expect oil demand growth to outstrip supply despite the possible return of Iranian crude and condensate exports.
"Despite the mobility restrictions that are still in place, oil demand is recovering dynamically around the world," Commerzbank said.
Iran has been in talks with world powers since April, working on steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with the 2015 nuclear pact.
On Monday the country's oil minister Bijan Zanganeh was quoted as saying that Tehran can easily reach 6.5 million barrels per day (bpd) production capacity when US sanctions are lifted.
"We see demand outstripping supply in the order of 650,000 barrels per day and 950,000 bpd in Q3 and Q4 respectively," ANZ analysts said, adding that this includes 500,000 bpd of increase in Iranian output.
The Organisation of the Petroleum Exporting Countries and their allies including Russia will meet on Tuesday.
The group known as OPEC+ is expected to stay the course on its plans to gradually ease supply cuts until July.
Separately, crude output in the United States soared 14.3% in March, the Energy Information Administration reported on Friday, while Baker Hughes data showed oil and gas rigs rising for a 10th month in a row last week.
Money managers raised their net long US crude futures and options positions in the week to May 25, the US Commodity Futures Trading Commission (CFTC) said on Friday.