Oil rose by more than 4% last week
Oil rose by more than 4% last week: Expectations of a recovery in the United States economy led
to a rise in crude oil prices last week.
The momentum of the increase in demand for crude oil is increasing.
Brent crude rose by 4.8% this week to record $ 69.63 a barrel.
At the same time, West Texas Intermediate crude (WTI) rose by 4.31% to reach $66.32 a barrel.
CNB International
According to CNB International on Friday, Brent crude has returned to the psychological level
of $70 a barrel, driven by good economic data and a desire to take risks by market participants in the financial markets.
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Promising American data
Data from the United States showed that in the week ending May 22, 2021,
the number of claims for unemployment benefits fell by 38,000 to reach 406,000.
This is the lowest number of claims since March last year.
Slowly but steadily, the labor market in the United States rose to normal before it was hit by the Corona “Covid-19” pandemic.
Other data revealed the acceleration of corporate spending during last April, and that there was a decrease in US oil reserves by 1.7 million barrels.
Reuters quoted Moody’s chief economist Scott Hoyt as saying “the economy continues to move”.
“In the future, economic growth will be driven by the flow of public savings accumulated during the epidemic”.
When the US economy improves
When the US economy improves, demand for crude oil will certainly increase.
This is because Uncle Sam’s country is the world’s largest consumer of crude oil. Now, analysts estimate that crude oil demand will approach 100 barrels a day in the third quarter of this year.
Demand stems particularly in summer in Europe and the United States that usually makes its citizens travel, especially with the ongoing vaccination programs, population mobility is likely to increase.
Analysts said: “Current gasoline demand has exceeded 2019 levels in several areas”.
As many as 34 million Americans are expected to travel by car during May 27 to 31,
a weekend that marks the beginning of summer, but they face the average price of gasoline at about $3.04% a gallon.
This is the most expensive price since 2014.
Meanwhile, US crude oil production rose by 14.3% to reach 11.2 million barrels a day in March, according to the latest government data.
However, the market is expected to absorb the increase in production.
In fact, the market is still able to absorb the increase in the production of OPEC +,
as well as the possibility of an increase in supply from Iran if sanctions are lifted.
A prospective meeting for OPEC
The 23 signatories to the OPEC + agreement, which brings together producers from the Organisation of Petroleum Exporting Countries (OPEC) and 10 allies, will meet on Thursday, June 1, to determine their crude production for the coming months.
The Organisation maintained its expectations for oil demand at the beginning of the month and it also expects a rise of 6 million barrels a day this year compared to 2020, to the 96.5 million barrels consumed daily on the planet.
OPEC is not only paying attention to the demands for black gold, but it is also closely following the supply of its competitors, such as the United States, the world’s largest producer, a subject of controversy at Ministerial summits.
Oil prices during the last trading day
Crude oil prices finished the week brilliantly.
The price of Brent oil has reached its highest level in 2 years because of strong US
economic data and expectations of a recovery in global demand.
On Friday, Brent crude closed its July 2021 delivery contract up 0.2% to the level of $69.63 a barrel.
This is the highest level of closure for Brent since May 2019.
Meanwhile, the price of West Texas Intermediate crude (WTI) for the July 2021 delivery contract retreated to $66.32 a barrel.
Eugene Weinberg
Eugene Weinberg, an analyst at Commerzbank said: “Driven by good economic data and a desire for risky assets
among financial market investors, Brent made a new offer to get the psychologically important figure at $70 a barrel”.
Weinberg added: “Demand fears over the epidemic give way to optimism, given that consumers will return quickly to”.
The epidemiological situation in Asia.. Developments in the American-Iranian Agreement
The increase in Corona infections in Asia has put little pressure on prices.
The number of casualties in South Asia exceeded 30 million on Friday, according to a Reuters survey led by India, which is struggling with the second wave of Covid-19 and a shortage of vaccines across the region.
oil from Iran
On the other hand, the potential for more oil from Iran to enter the market also limits this rise in black gold prices.
Bob Yoger, director of energy futures at Mizuho in New York said: “Iran will slow the rise”, and he added that market participants had been cautious before the weekend about the possibility that an agreement between Iran and the Western Powers would increase market supply.
Negotiating in Vienna
Iran and world powers have been negotiating in Vienna since April so as to determine what steps
Tehran and Washington should take regarding the nuclear sanctions and activities to return to full compliance
with the 2015 nuclear deal.
If the negotiations succeed, lifting some economic sanctions, such as the oil embargo that is in effect since 2018,
will pave the way for an increase in production of approximately 1.5 million barrels a day compared to Tehran’s current level.
United States
In the United States, Yauger said that concerns about the potential demand for Memorial Day weekend had become bleak.
He added: “There are many things to worry about”.