On Thursday, Oil Prices gained around $1.50 a barrel, extending gains from the previous three sessions, on prospects of tighter supplies through 2021 as economies recover from the coronavirus outbreak. Brent crude closed at $73.79 per barrel, up to $1.56 or 2.2 percent, while WTI crude in the United States settled at $71.91 per barrel, up $1.61 or 2.3 percent.
Phil Flynn, the senior analyst at Price Futures Group in Chicago, said, “The death of Demand was greatly exaggerated. Demand is not going away, so we’re back looking at a very tight market.” The Organization of Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed this week to increase the Oil supply by 400,000 barrels per day from August to December to keep prices low and satisfy rising Demand.
However, Morgan Stanley predicted that global benchmark Brent would trade in the mid-to high-$70s per barrel for the rest of 2021, as Demand continues to surpass supply in the second half of the year. In the end, we expect the global GDP (gross domestic product) recovery to stay on track, inventory data to remain positive, our balances to tighten in H2, and OPEC to remain united. Furthermore, suppose domestic fuel prices maintain at present levels. In that case, Russia may begin the process of prohibiting gasoline exports next week, according to Energy Minister Nikolai Shulginov, implying tighter Oil supplies ahead.
Crude stocks in the United States, the world’s largest Oil consumer, unexpectedly increased by 2.1 million barrels last week to 439.7 million barrels, the highest level since May, according to statistics from the US Energy Information Administration. Inventories at the Cushing, Oklahoma crude storage hub and delivery point for WTI, on the other hand, have been falling for six weeks straight, and last week recorded their lowest level since January 2020. According to EIA data, Demand for gasoline and diesel also increased last week.