Oil extended gains above $71 a barrel on Friday, trading close to a two-year high as OPEC+ supply discipline and recovering demand countered concerns about patchy Covid-19 vaccination rollout around the globe.
The Organisation of the Petroleum Exporting Countries (OPEC) and allies on Tuesday said they would stick to agreed supply restraints. A weekly supply report on Thursday showed US crude inventories dropped more than expected last week.
Brent crude rose $0.12, or 0.2%, to $71.43 a barrel by 1142 GMT. It reached an intra-day high of $71.99 on Thursday, the highest since May 2019. US West Texas Intermediate crude was up $0.23, or 0.3%, at $69.04.
“After much dilly-dallying, Brent appears to have found a new home above $70,” said Stephen Brennock of oil broker PVM.
“Summer and the reopening of the global economy is bullish for oil demand in the second half of the year.”
For the week, Brent is on track for a gain of more than 2.8% and US crude is heading for a 4% rise. It is the second week of gains for both contracts.
“Oil prices are finding a tailwind from the clear signs that demand is making a solid recovery,” Commerzbank said.
Also boosting oil this week was a slowdown in talks between the United States and Iran over Tehran’s nuclear programme, which reduced expectations of a rise in Iranian oil supply.
In focus later on Friday will be US jobs figures for May. The consensus forecast for non-farm payrolls, due at 1230 GMT, is that about 650,000 jobs were added in May.
While rising demand and the fast pace of vaccinations in countries such as the United States have boosted oil, a slower inoculation rollout and high infections in the likes of Brazil and India are hitting demand in high-growth oil markets.