Brent nears $70 on rosy US data, oil demand outlook

Oil prices pushed higher on Friday, taking Brent to near $70 a barrel as firm US economic data and expectations of a strong rebound in global fuel demand in the third quarter underpinned the market.

Brent crude futures for July gained 32 cents, 0.5 percent, to $69.78 a barrel by 0610 GMT while US West Texas Intermediate crude for July was at $67.18 a barrel, up 33 cents, or 0.5 percent.

“Oil headed higher on robust US economic data and growing sentiment that if the Iran nuclear deal is revived, it will not include an immediate removal of sanctions and that the oil market will not get quickly flooded with excess supplies,” OANDA analyst Edward Moya said in a note.

Brent and WTI are both on track to post weekly gains of 5 percent to 6 percent as analysts expect global oil demand to rebound closer to 100 million barrels per day in the third quarter on summer travel in Europe and the United States following widespread COVID-19 vaccination programs.

“Gasoline demand has now exceeded 2019 levels in many areas,” ANZ analysts said in a note, adding that this may be partly offset by weakness in Asia which is suffering a wave of COVID-19.

Robust economic data from the United States, the world’s largest economy and oil consumer, also buoyed risk appetite. The number of Americans filing new claims for unemployment benefits fell to the lowest since mid-March 2020, beating estimates.

Balancing expectations of a recovery in demand against a possible increase in Iranian supply, the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, is likely to stick to the existing pace of gradually easing oil supply curbs at a meeting on Tuesday, OPEC sources said.

“Another 1 million bpd of oil would certainly slow the current drain on inventories,” ANZ said, adding that this will ultimately limit the price rise.

Iran and global powers have negotiated in Vienna since April to work out steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with Iran’s 2015 nuclear pact with world powers.

Analysts expect Iran to add between 500,000 bpd and 1.5 million bpd of crude and condensate to the market once sanctions are lifted.