Oil gains above $71 as traders see prospects for higher prices

Oil traded above $71 a barrel as some of the most prominent voices in the market said they expect prices to continue to gain.

West Texas Intermediate was 0.9 per cent higher after ending Monday little changed. Even though prices are near the highest since 2018, traders Glencore Plc and Vitol Group still see at least some further gains in oil. Those views came at the FT Commodities Global summit, where opinions aired included:

Global demand should return to normal in the third quarter of next year, according to Alex Sanna, head of oil marketing at Glencore, who said crude prices may move higher on more widespread vaccinations and inflationary pressures

Diesel and petrochemical demand is already at pre-Covid levels, according to Russell Hardy, Vitol’s chief executive officer, adding that there is a “little bit more upside” for oil prices

There’s a chance oil could hit $100 a barrel on a lack of supply amid underinvestment in the sector, according to Trafigura CEO Jeremy Weir

Crude has soared this year as vaccination programs have turned the tide against the pandemic in the U.S., Europe and China. Gasoline demand in China last month was five per cent higher than during the same period in 2019, according to the median of five estimates from the nation’s top oil companies including China Petroleum & Chemical Corp., better known as Sinopec.

“Continuous supply deficit is as good as guaranteed for the coming six months,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. “The role of the OPEC alliance will remain as crucial as it has been since the break-out of the health crisis.”

Still, a decision by the U.K. to extend virus restrictions has tempered some optimism around robust summer consumption. On Monday, World Health Organization Director-General Tedros Adhanom Ghebreyesus warned that the virus is now “moving faster than the global distribution of vaccines.”

Prices

  • WTI for July delivery rose 0.9 per cent to $71.52 a barrel by 12:27 p.m. in London.
  • Brent for August settlement added 0.9 per cent to $73.54 a barrel.

 

© 2021 Bloomberg L.P.

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.