Oil held near $74 a barrel as investors focused on an OPEC+ meeting this week that may pave the way for more supply from the group.
Futures in New York were steady after a fifth weekly gain, while global benchmark Brent traded near its highest level since October 2018. The alliance gathers on Thursday to discuss its production policy for August,. The group is expected to revive some halted output as vaccine rollouts lead to greater mobility and rising demand for transport fuels.
US forces, meanwhile, conducted airstrikes against Iranian-backed militia groups blamed for drone attacks on US personnel and facilities in Iraq, the Defense Department said. The strikes on Sunday were aimed at “operational and weapons storage facilities” in Syria and Iraq.
Oil posted fifth weekly gain as market tightens
Oil is up more than 50% this year as a robust rebound from the pandemic in major energy market such as the US, Europe and China underpins demand. The rapid recovery has also drained stockpiles built up during Covid-19, and the International Energy Agency has urged OPEC+ to return more supply to keep markets balanced.
Separate OPEC+ committees are scheduled to meet Tuesday and Wednesday to analyse market data ahead of the full ministerial gathering. The alliance may boost output by about 550,000 barrels a day for August, according to a Bloomberg survey. However, that’s barely a quarter of the global supply deficit that OPEC+ itself anticipates during that month.
West Texas Intermediate for August delivery rose 0.2% to $74.16 a barrel on the New York Mercantile Exchange at 7:57 a.m. in Singapore after gaining 1% on Friday.
Front-month futures advanced 3.4% last week.
Brent for August settlement climbed 0.2% to $76.31 on the ICE Futures Europe exchange after adding 0.8% on Friday.
An increase in Iranian crude flows, meanwhile, is unlikely to materialise any time soon as talks to revive a nuclear deal drag on. Some analysts predict the election of conservative cleric Ebrahim Raisi as Iran’s new president may delay a rejuvenated pact.
The prompt time spread for Brent was 82 cents a barrel in backwardation — a bullish structure where near-dated contracts are more expensive than later-dated ones. That compares with 85 cents a week earlier.