Oil futures on Monday kicked off the week with more gains, boosted by optimism over reviving global demand as the recovery from the COVID-19 pandemic continues.
“With limited exception, crude and product prices have consistently marched higher in 2021, as the prospect of a global demand recovery has overshadowed the potential for new supply to hit the market,” said Robbie Fraser, global research and analytics manager at Schneider Electric.
Regarding demand, “some recent support is likely tied to talks around the Iranian nuclear deal, which while ongoing, have failed to deliver a breakthrough that would allow Iran to resume oil exports without the threat of U.S. sanctions,” said Fraser, in a note.
Iran’s foreign ministry has “offered a more cautious tone in recent days, in contrast to some more optimistic quotes that had been released in previous weeks,” he said. “Still, Iran has stated there is broad agreement around the terms of a renewed deal, even as specific items remain unresolved.”
West Texas Intermediate crude for July delivery
CL00,
CLN21,
rose 63 cents, or 0.9%, to $71.54 a barrel on the New York Mercantile Exchange. August Brent crude
BRN00,
BRNQ21,
the global benchmark, gained 67 cents, or 0.9%, to trade at $73.36 a barrel on ICE Futures Europe.
Read: Here’s what sparked the latest talk over $100 oil prices
WTI was trading at the highest price for a most actively traded contract since October 2018, according to FactSet, while Brent changed hands at its highest level since April 2019.
“Good sentiment on the financial markets and the optimistic demand outlook indicated by leading energy agencies are contributing to the upswing,” said Eugen Weinberg, analyst at Commerzbank, in a note.
The International Energy Agency helped buoy sentiment at the end of last week. It’s monthly report on Friday projected demand to rise in 2021 before growing at a faster rate next year, reaching 100.6 million barrels a day by the end of 2022.
U.S. benchmark stock indexes saw mixed trading Monday as investors prepared for this week’s meeting of Federal Reserve policy makers, which will conclude Wednesday.
Read: What the market wants to hear from Powell about inflation at the coming Fed meeting
Investors will be looking for clarity from policy makers on their views on rising inflation pressures and the timing of any effort to begin reining in the Fed’s bond-buying program.
Also see: How oil soaring to $100 a barrel could be bad for this boom-bust sector and the economy
Back on Nymex, petroleum product prices moved up along with oil. July gasoline
RBN21,
added 0.3% to $2.19 a gallon and July heating oil
HON21,
tacked on 0.5% to $2.13 a gallon.
July natural gas
NGN21,
traded at $3.30 per million British thermal units, up 0.2%.
