(Bloomberg) Oil headed for a fifth weekly advance, the longest winning streak since December, as shrinking stockpiles added to signs that global markets are bouncing back from the pandemic.Futures have increased by 2% in New York this week, while global benchmark Brent is at the highest level since October 2018. Prices are drawing support from expectations that the OPEC+ alliance led by Saudi Arabia and Russia — which meets on July 1 — won’t revive production fast enough to prevent markets from tightening.
Stockpiles are draining rapidly as fuel consumption rebounds in key regions including the U.S. and Europe. At the same time, the prospect of an imminent surge of Iranian oil is diminishing as talks to revive a nuclear deal drag on. The increasingly bullish picture is helping to fan speculation that Brent may eventually return to $100 a barrel.
As a result, major consumers like India are urging the Organization of Petroleum Exporting Countries and its partners to revive more of the output they shuttered during the pandemic. While the Saudis say they’re wary of oil’s inflationary threat to the economy, Riyadh has signaled it will move cautiously.
“Sentiment and price momentum remain extremely positive” for crude, said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. There’s “growing pressure on OPEC+” to intervene, he said.
West Texas Intermediate for August delivery traded 0.3% lower at $73.09 a barrel on the New York Mercantile Exchange by 10:18 a.m. in London
Front-month futures are up 2% this week.
Brent for August settlement slipped 0.2% to $75.43 on the ICE Futures Europe exchange.
Its prompt timespread was 80 cents in backwardation, down from 85 cents at the start of the week.
Russia is considering making a proposal that OPEC+ boost output, and delegates say a hike is being informally discussed. The average gain forecast by analysts was for about 550,000 barrels a day — barely a quarter of the global supply deficit that the alliance anticipates during August.
“This expansion of supply is by no means likely to throw the market off track,” said Weinberg. “If anything, it will not even be enough.”
Other market news:
Commodities are on course for a fifth quarterly rise next week, the best run for the complex since 2008. Crude oil is in boisterous form heading into the second half.
OPEC+ producers are expected to return only a “small” volume in August as they try to balance the market’s need for more supply against a fragile recovery in demand, according to Australia & New Zealand Banking Group Ltd.
U.S. propane prices have topped $1 a gallon for the first time seasonally since 2014 as domestic and overseas demand take off.
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