Oil futures edged lower Friday, pulling back modestly after a rally led by optimism over U.S. gasoline demand helped push the global benchmark to its highest close since May 2019.
West Texas Intermediate crude for April delivery fell 21 cents, or 0.3%, to $65.81 a barrel on the New York Mercantile Exchange. May Brent crude was off 22 cents, or 0.3%, at $69.41 a barrel, after posting the highest finish for a front-month contract since May 28, 2019.
“Oil prices are back in the fast lane, Brent having already put the psychologically important $70 per barrel mark to the test once again,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.
Gasoline futures led the way higher on Thursday, with the April contract ending at a 2 1/2-year high, boosted by concerns over tightening U.S. inventories. Gasoline was up 0.6% Friday at $2.1508 a gallon
Meanwhile, the Organization of the Petroleum Exporting Countries on Thursday boosted its outlook for 2021 demand growth.
At the same time, OPEC looks for non-OPEC oil output to recovery by nearly 1 million barrels a day after falling 2.6 million barrels a day last year, Weinberg noted, while OPEC+ is likely to increase output over the course of the year in response to higher prices.
“We therefore believe that prices are already too high and expect them to decline to $60 per barrel during the course of the year,” he said. “In the short term, however, higher prices cannot be ruled out given the considerable price momentum and rising investment demand.”