Oil prices rose on Thursday, extending strong gains made in previous sessions on expectations of tighter supplies until the end of the year as economies recover from the coronavirus crisis.
Brent crude rose 20 cents, or 0.3%, to $72.43 a barrel at 1335 GMT, after rising 4.2% in the previous session. U.S. West Texas Intermediate (WTI) crude rose 23 cents, or 0.33%, to $70.53 a barrel, after rising 4.6% on Wednesday.
“Some soft spots have emerged in the oil demand recovery, but this is unlikely to change the outlook fundamentally,” Morgan Stanley said in a note.
Members of the Organization of the Petroleum Exporting Countries and other producers including Russia, a group known as OPEC+, agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand.
But demand was still set to outstrip supply in the second half, leading Brent prices to trade in the mid to high-$70s per barrel for the remainder of 2021, Morgan Stanley said.
“In the end, the global GDP (gross domestic product) recovery will likely remain on track, inventory data continues to be encouraging, our balances show tightness in H2 and we expect OPEC to remain cohesive,” it said.
Crude inventories in the United States, the world’s top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.
Barclays analysts also expected a faster-than-expected draw in global oil inventories to pre-pandemic levels, prompting the bank to raise its 2021 oil price forecast by $3 to $5 to average $69 a barrel.
“Notwithstanding the tail risks, supply-demand dynamics point to a slow grind higher in prices over the next few months,” Barclays said in a report on Thursday.