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Oil Prices Edge Higher, Brent Records all Time High of $75

Crude oil prices rose on Tuesday, with Brent hitting $75 a barrel for the first time since April 2019, as investors remained bullish about a quick recovery in global oil demand and as concerns eased over an early return of Iranian crude.

Brent crude futures for August climbed 29 cents, or 0.4%, to $75.19 a barrel by 0658 GMT, paring earlier losses. It rose as high as $75.27 a barrel, the strongest since April 25, 2019, earlier in the session.

U.S. West Texas Intermediate (WTI) crude for July was at $73.66 a barrel, unchanged from the previous session. WTI for August climbed 13 cents, or 0.2%, to $73.25 a barrel.

Brent gained 1.9%, and WTI jumped 2.8% on Monday.

oil chart
U.S WTI Index Performance Chart

Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel. The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.

“Oil prices took a breather, but the markets’ tone remains firm amid expectations that fuel demand will pick up quickly along with economic recovery in Europe and the United States. Investors are focusing on weekly U.S. inventory data as crude oil stockpiles have fallen for a fourth consecutive week.” Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co.

BofA Global Research raised its Brent crude price forecasts for this year and next, saying that tighter fuel supply and recovering demand could push oil briefly to $100 per barrel in 2022.

 

The Energy Information Administration said last week that U.S. crude oil stockpiles dropped sharply in the week to June 11 as refineries boosted operations to their highest since January 2020, signalling a continued improvement in demand.

U.S. crude stocks were expected to drop for the fifth consecutive week, while distillate and gasoline were seen rising last week.

The price gap between the world’s two most actively traded crude contracts narrowed to its lowest in more than seven months, demonstrating that U.S. oil output is still in the COVID-19 doldrums, with the market likely to remain undersupplied.

Negotiations to revive the Iran nuclear deal paused on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election.

Raisi on Monday backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting U.S. President Joe Biden, even if Washington removed all sanctions.

“The lower probability of Iranian crude returning to the market due to the new hardline president is also supporting the market.” Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co.

Meanwhile, China has issued 35.24 million tonnes of crude oil import quotas to non-state refiners in the second batch of allowances for 2021, a 35% drop from the same slot last year, according to a document seen by Reuters and two sources with knowledge of the matter.