Futures in New York climbed above $63 a barrel, adding as much as 0.8%. An OPEC+ committee agreed the group should stick to its road-map for boosting supply in the coming months, reflecting confidence in the prospects for global consumption. But a surge of coronavirus cases in India and Brazil shows the recovery remains uneven.
The market will look for further guidance later on Wednesday from weekly U.S. inventory figures as well as a Federal Reserve interest rate decision.
Crude prices have risen this year on a global recovery driven by China and the U.S., with positive signs also emerging from parts of Europe. Goldman Sachs Group Inc. is forecasting an unprecedented jump in demand over the next six months as vaccination rates rise, with benchmark Brent crude seen reaching $80 in the third quarter. But virus flare-ups in some regions and prospects for higher supply from OPEC+, including potentially Iran, are tempering optimism.
“Upside is capped due to a rise in production, demand uncertainties and possible higher production from Iran,” said Hans van Cleef, senior energy economist at ABN Amro. “While downside seems protected by the remaining OPEC+ cuts and unwinding of lockdowns in other countries.”
The American Petroleum Institute reported a 4.32 million-barrel increase in U.S. crude stockpiles last week, according to people familiar with the data. If confirmed by government figures later on Wednesday, that would be a second weekly gain. The API posted a drop in gasoline inventories.
The risks to the demand outlook are starting to show up in gauges of market health, however. The structure of the Middle Eastern Dubai benchmark slumped on Wednesday to only a shallow backwardation — an indication that tightness in crude supplies may be easing.
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