Oil rose on May 18 to hit $70/bbl for the first time since March, as expectations of demand recovery following reopenings of the European and U.S. economies offset concern over spreading coronavirus cases in Asia.
The British economy reopened on May 17, and Europe is starting to reopen cities and beaches. New cases in the U.S. continued to fall and New York lifted the mask requirement for vaccinated people.
Brent crude was up 47 cents, or 0.7%, at $69.93 by 0825 GMT, and earlier topped $70 for the first time since March 15. WTI crude in the U.S. was up 45 cents, or 0.7%, at $66.72.
“Economies are again switching a gear higher,” said Tamas Varga of broker PVM. “The euphoria is reflected in the general belief that the economic revival will be soon coupled with oil demand recovery.”
The latest gain to $70 brings Brent’s rally this year to 35%, supported by supply cuts by OPEC and allies. This could lead to a further advance, some analysts said.
“A rise through $70 should trigger more systematic buying and see it advance to $71.50 a barrel quite quickly,” said Jeffrey Halley, analyst at brokerage OANDA.
European and U.S. progress in the battle against the pandemic contrasts with the situation in Asia, which is limiting oil's rally.
Singapore and Taiwan have reinstated lockdown measures, and India has seen a plunge in fuel demand following restrictions to curb infections.
Also limiting oil’s upside is the prospect of a revival of Iran’s nuclear deal that would allow the OPEC producer to fully restart exports.
In focus later will be this week’s U.S. supply reports, expected to show a 1.7 million-barrel rise in crude inventories. The first report, from API, is out at 2030 GMT.
Recommended Reading
Q&A: EnCap’s Thielemann: Private Equity ‘Survivors’ Poised to Thrive
2023-03-21 - EnCap private equity veteran Brad Thielemann discusses the role of private equity in traditional oil and gas investing — including the need to ramp up investments to meet demand — as well as its trajectory for financing the transitions ahead.
Brazos Midstream Bets on the Permian’s Prowess
2023-04-19 - Brazos Midstream leadership reckons there will come a time where entering the public sphere makes sense, but for now, Brazos’ strategy reaps the rewards of private perspective.
Brad Gray on Diversified’s Strategy Past Appalachia [WATCH]
2023-03-30 - Diversified Energy’s Brad Gray sat down with Pietro Pitts at Hart Energy’s DUG Haynesville Conference in Shreveport to talk about what Diversified is doing to set itself apart from other E&Ps and future plans as the company expands outside of the Appalachian Basin.
Top 15 Private E&Ps in the Midcontinent, Gulf Coast
2023-05-23 - The leading private E&Ps in the Midcontinent and Gulf Coast, according to research from Enverus.
Private Equity Returns to Oil and Gas Industry
2023-04-22 - As private equity firms return to upstream oil and gas, firms might raise up to $15 billion for oil and gas upstream, but the industry could use up to $25 billion, experts said.