Brent rallies to above $75 for first time in more than two years as market fundamentals tighten
Brent, the international benchmark for more than half of the world’s oil, rallied to above $75 per barrel, the first time since 2018, as the world’s largest economies rebound from the pandemic and US-Iran talks stall, delaying a return of Iranian crude to the market.
Brent, rose 0.32 per cent to trade at $75.14 per barrel at 8.48am UAE time. West Texas Intermediate, which tracks US crude grades, also continued its recent rally rising 0.08 per cent to reach $73.72 per barrel.
“Oil markets remain unperturbed by the swings in other financial markets and continue to look to tight fundamentals to support their drive higher,” said Shady Elborno, head of macro strategy at Emirates NBD.
Global oil demand is expected to return to pre-Covid levels by the end of 2022, with the rebound supported across sectors and products, the International Energy Agency said earlier this month.
Demand for crude is expected to grow this year by 5.4 million barrels per day and a further 3.1 million bpd to average 99.5 million bpd, according to the Paris-based agency.
Oil’s immunity to price volatility in either the commodity or currency markets strongly suggests that demand is high and rising, said Jeffrey Halley, senior market analyst, Asia Pacific at Oanda.
“By default, that indicates that the global recovery in the real world remains on track even as other asset classes chase their tails,” he added.
The election of Ebrahim Raisi as Iran’s new president this week may complicate the ongoing dialogue between Washington and Tehran to restore the nuclear deal.
Iran was Opec’s fourth-largest producer before the resumption of US sanctions by the Trump administration.
“Talks between Iran and world powers have not progressed enough to have the US in actual attendance,” said Edward Moya, senior market analyst, the Americas at Oanda.
“The longer talks drag, the further Iranian sanction relief is delayed. Iranian output is expected to increase in the third quarter, but if no breakthroughs are made over the next few weeks, that could be in jeopardy,” he added.
Middle East producers are bullish about oil’s prospects. Iraq, Opec’s second-largest producer expects oil to reach $80 per barrel.
In a report on Monday, Bank of America said tighter supply and demand balances in 2022 could push oil to $100 a barrel, with Brent poised to average $75 next year.
Source: thenationalnews.com
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Published: 22-06-2021
