Oil prices rose on Wednesday after OPEC and its allies stuck to their plan to cautiously bring back oil supply to the markets in June and July while expecting a robust recovery in demand in the United States and China, the world’s two biggest oil consumers.
U.S. West Texas Intermediate (WTI) crude futures rose 18 cents, or 0.27%, to $67.90 as of 0642 GMT, extending a 2.1% gain following the Memorial Day holiday in the United States on Monday. Prices rose to their highest since October 2018.
Brent crude futures climbed 22 cents, or 0.31%, to $70.47 a barrel, after rising 1.3% overnight, when it hit its highest since March 8.
OPEC+ Meeting on Oil Supply
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC+, agreed on Tuesday to keep to their plan to ease supply curbs through July gradually.
“The market appears focused on the more constructive outlook for later this year, with OPEC+ of the view that the market will see significant stock drawdowns between September and the end of the year,” ING Economics analysts
Including extra cuts by Saudi Arabia tapering off through July, the producer group will be returning 700,000 barrels per day (BPD) in June and 840,000 BPD in July, ING said.
Analysts also say the slow progress of Iran nuclear talks provides breathing room for demand to catch up before the return of Iranian barrels.
“The return of Iranian barrels does not appear to be an imminent issue for the oil market with the fifth round of nuclear negotiations in Vienna failing to produce a major diplomatic breakthrough,” analysts at RBC Capital Markets
OPEC Secretary-General Mohammad Barkindo also played down any potential disruption to the market, saying the group expected any return of Iranian exports “will occur in an orderly and transparent fashion” if and when a nuclear deal is reached.
