Oil prices rose to their highest levels in several years again on Friday, to record the third week of gains in a row, supported by the improvement in global demand expectations, as the increase in vaccination activity leads to the lifting of restrictions related to the pandemic.
Brent crude futures rose 17 cents, to a settlement price of $72.69 a barrel, after hitting their highest levels since May 2019. Brent achieved a weekly rise of 1%.
West Texas Intermediate crude futures advanced 62 cents to $70.91 a barrel, to be settled at their highest level since October, 2018. It is up 1.9% during the week.
“The pace of demand returning is outpacing the pace of supply returning, and we’ll need more supply to meet that demand,” said Phil Flynn, chief analyst at Price Futures Group in Chicago.
The International Energy Agency predicted in its monthly report that the Organization of the Petroleum Exporting Countries and its allies, within the framework of the OPEC + group, will need to increase production to meet demand that is set to recover to pre-pandemic levels by the end of 2022.
“OPEC + needs to increase production in order for global markets to have sufficient supplies,” the Paris-based agency said.
She added that the rising demand and short-term policies of countries were in contrast to the agency’s call to end new financing for oil, gas and coal.
“In 2022, there is room for the 24 members of the OPEC + group, led by Saudi Arabia and Russia, to increase crude supplies by 1.4 million barrels per day above their target for the period between July 2021 and March 2022,” the agency said.
Investment bank Goldman Sachs expects Brent crude prices to reach $80 a barrel this summer, betting that the recent rise in the oil market will continue, as the distribution of vaccines against the Corona virus boosts global economic activity and demand for crude.
Analysts at ANZ said that data revealing that car traffic on the roads is returning to pre-Covid-19 levels in North America and most of Europe is encouraging.
ANZ analysts considered that “even the jet fuel market is showing signs of improvement, while flights in Europe have risen 17% over the past two weeks, according to Eurocontrol.”
In an indication of future supplies, energy services company Baker Hughes said in its weekly report that the number of US oil rigs increased by six to 365 this week, hitting its highest level since April 2020. This was the largest weekly increase for oil rigs in a month.