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Markets

Oil prices rise on signs of tightening supplies

  • Demand seen outstripping supply in second half of year
  • US inventories rise for first time since May
Updated 22 Jul 2021

LONDON: Oil prices rose on Thursday, extending strong gains made in previous sessions on expectations of tighter supplies until the end of the year as economies recover from the coronavirus crisis.

Brent crude rose 77 cents, or 1.1%, to $73 a barrel at 1100 GMT, after rising 4.2% in the previous session. US West Texas Intermediate (WTI) crude rose 81 cents, or 1.15%, to $71.11 a barrel, after rising 4.6% on Wednesday.

"Some soft spots have emerged in the oil demand recovery, but this is unlikely to change the outlook fundamentally," Morgan Stanley said in a note.

Members of the Organization of the Petroleum Exporting Countries and other producers including Russia, a group known as OPEC+, agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand.

But demand was still set to outstrip supply in the second half, leading Brent prices to trade in the mid to high-$70s per barrel for the remainder of 2021, Morgan Stanley said.

Oil prices slip after rise in US crude oil stocks

"In the end, the global GDP (gross domestic product) recovery will likely remain on track, inventory data continues to be encouraging, our balances show tightness in H2 and we expect OPEC to remain cohesive," it said.

Crude inventories in the United States, the world's top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, US Energy Information Administration data showed.

Barclays analysts also expected a faster-than-expected draw in global oil inventories to pre-pandemic levels, prompting the bank to raise its 2021 oil price forecast by $3 to $5 to average $69 a barrel.

"Notwithstanding the tail risks, supply-demand dynamics point to a slow grind higher in prices over the next few months," Barclays said in a report on Thursday.

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samir sardana Jul 23, 2021 12:59am
As I said in my comment in your news link "https://www.brecorder.com/news/40107938/top-oil-producers-expected-to-agree-on-modest-output-boost",Oil prices will not fall ! The Saudis THOUGHT they had a deal,and that very night Nymex fell by 6 USD and today it is back to square Cogitation is FREE,drilling is NOT FREE, and the OIL SUPPLY CHAIN,needs HUMANS ! Robots are a not feasible , and the cost of a robotic error in the Oil sector,is gargantuan. Many nations in the EU are in the 4th wave and most VAXES are ineffective w.r.t. Delta. The Only way price of oil falls, is if there is demand destruction in the US &EU, and PRC demand does NOT RISE.There will NOT BE any demand destruction, in the USA, and PRC has exited the COVID trap. So Oil Prices will rise,due to the incremental demand, from PRC and USA, Also,High Prices at these levels,boots US oil Profits and Oil Jobs. This will destroy nations like India , who are balancing budgets,by taxing edible and fuel oils.dindooohindoo
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