Oil prices rose on April 15 to the highest level in nearly a month, after jumping 5% in the previous session, driven by increased demand forecasts from the International Energy Agency (IEA) and OPEC as major economies recover from the pandemic.
Brent crude was up by 16 cents at $66.74/bbl by 0659 GMT, after reaching $66.94 earlier, the highest since March 18, and gaining 4.6% on April 14. WTI futures in the U.S. rose 12 cents to $63.27/bbl, earlier rising to $63.48, also the highest since March 18. The contract rose 4.9% in the previous session.
Supply discipline and rebounding economies are set to give oil a chance to break out of the recent range, Goldman Sachs analysts said in a report.
“We remain positive on Brent oil forecasting US$80/bbl in 3Q 2021 on a near-term demand recovery and supply discipline,” Goldman analysts said.
The U.S. investment bank also brought forward its predicted peak for global oil transport demand by one year to 2026, due to the rising penetration of electric vehicles as economies push for decarbonization.
Even so, it does not forecast peak oil demand this decade due to growth in petrochemicals and aviation fuel markets, although it expects overall oil demand beyond 2025 “to be anemic mainly due to electrification.”
Global oil demand and supply are set to be rebalanced in the second half of this year after the COVID-19 pandemic destroyed demand in 2020, the IEA’s monthly report said.
Producers may then need to pump a further 2 million bbl/d to meet the demand.
OPEC, which has been withholding supply in tandem with other producers including Russia, this week raised its forecast for global oil demand this year.
OPEC expects demand to rise by 70,000 bbl/d from last month's forecast and global demand is likely to rise by 5.95 million bbl/d in 2021, it said.
U.S. crude inventories were down by 5.9 million barrels last week, the Energy Information Administration (EIA) said on April 14, more than double analysts' expectations for a 2.9 million-barrel decline. East Coast crude stocks hit a record low.
“We see robust stock draws even after factoring in bearish risks as refinery runs are set to rise sharply in the coming months,” Citi Research analysts said in a note.
Gasoline supplied to the market last week, an indicator of U.S. consumption of the fuel, increased to 8.9 million bbl/d, the highest since August, the EIA report said.
U.S. oil producers have been gradually increasing drilling activity as oil prices have rebounded but output growth has been muted as investors pressure companies to rein in spending and focus on returns.
Schlumberger and NOV have entered a partnership on May 10 to accelerate automated drilling solutions adoption by oil and gas operators and drilling contractors.
The decision suspended certain parts of the law that strengthens state oil company Pemex, which Congress approved in April, the document showed.