Oil near one-month highs as demand outlook improves

LONDON: Oil prices eased on Thursday but remained close to a one-month high that was driven by more positive demand forecasts from the International Energy Agency (IEA) and OPEC as economies recover from the COVID-19 pandemic.

Brent crude was down 24 cents, or 0.4%, at $66.34 a barrel by 1220 GMT after touching its highest since March 18 at $66.94.

US West Texas Intermediate futures fell 36 cents, or 0.6%, to $62.79. It had earlier reached $63.48, also the highest since March 18.

Both contracts rose by about 5% on Wednesday.

"Support is coming from various sides: for one thing, the macro environment remains favourable in terms of the economic outlook, the high risk appetite among investors and the weak US dollar," Commerzbank said.

The IEA and Organization of the Petroleum Exporting Countries (OPEC) made upward revisions to their global oil demand growth forecasts for 2021 this week to 5.7 million barrels per day (bpd) and 5.95 million bpd respectively.

Prices also found support from a big fall in US inventories.
US crude inventories were down by 5.9 million barrels last week, Energy Information Administration (EIA) data showed, with East Coast crude stocks at a record low.

"We see robust stock draws even after factoring in bearish risks as refinery runs are set to rise sharply in the coming months," Citi Research analysts said in a note.

Gasoline supplied to the market last week, an indicator of US consumption of the fuel, increased to 8.9 million bpd, the highest level since August, the EIA said.

Supply discipline and rebounding economies are set to give oil a chance to break out of the recent range, Goldman Sachs analysts said in a report.

"We remain positive on Brent oil forecasting US$80/bbl in 3Q21 on a near-term demand recovery and supply discipline," they said.