Oil prices rose early on Friday for a sixth consecutive day and were on track for weekly and monthly gains after the defeats on climate policies that major oil firms suffered at the hands of shareholders and judges.
As of 9:22 a.m. EDT on Friday, WTI Crude prices were up by 0.82 percent at $67.40, after settling on Thursday at their highest level since the end of October 2018. Brent Crude was also up and nearing the $70 mark—at $69.86, up by 0.66 percent on the day.
Expectations that reopening economies and higher travel numbers in the United States and Europe would boost fuel demand outweighed this week concerns about the coronavirus spread in parts of Asia and the potential return of Iranian oil to the market.
In addition, analysts widely expect OPEC+ to reaffirm at its meeting next Tuesday plans to unwind the cuts by 840,000 barrels per day (bpd) from July 1, signaling confidence that the market is well-positioned to absorb the additional supply as demand is rising with economies reopening. Russia estimates that the global oil market is currently in a deficit of around 1 million bpd, Deputy Prime Minister Alexander Novak said on Wednesday.
Earlier this week, Goldman Sachs kept its outlook for oil prices to rise to $80 per barrel by the end of the year despite the possibility of Iran’s oil returning to the market.
Mid-week, the EIA reported inventory draws in crude oil, gasoline, and middle distillates, also boosting market sentiment.
“The demand outlook for the US remains supportive, with the economy continuing to reopen, whilst we are also about to officially enter the summer driving season, which should provide a further boost to gasoline demand,” ING strategists Warren Patterson and Wenyu Yao said on Friday.
“Crude oil futures found a fresh bid with surging U.S.-led demand offsetting concerns about the prospect of rising Iranian supplies,” Saxo Bank commented on Friday.
“Until the market receives more clarity about the outcome of the U.S.-Iran negotiations, the upside potential beyond the March high at $71.40 seems limited,” Saxo Bank’s strategy team added.
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By Tsvetana Paraskova for Oilprice.com
Moreover, the rise of oil prices has nothing to do with the boardroom showdown. It is due to an increasingly optimistic global oil demand underpinned by a global economy returning to normalcy, an end of the oil glut in the market and an OPEC+ brilliantly handling stability and prices in the market.
Neither the Dutch court ruling nor the ExxonMobil Boardroom showdown or the call by the International Energy Agency (IEA) for an immediate halt to oil exploration will force Big Oil to divest of its core business and become overwhelmingly a green energy business. This isn’t going to happen as long as the global economy continues to run on oil and gas.
Brent crude is headed to $70 a barrel soon and is projected to rise further to $70-$80 in the third quarter of this year and average $65-$67 for the year with global oil demand returning to pre-pandemic level by the middle of this year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London