Oil futures rose Wednesday, with the global benchmark pushing further above $70 a barrel, on optimism over the outlook for demand as the world economy emerges from the COVID-19 pandemic.
West Texas Intermediate crude for July delivery the U.S. benchmark, rose 65 cents, or 1%, to $68.37 a barrel on the New York Mercantile Exchange. August Brent crude the global benchmark, advanced 76 cents, or 1.1%, to $71.01 a barrel on ICE Futures Europe.
Brent and WTI both closed at two-year highs Tuesday after the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed to stick to a timetable for gradually easing production this month and next.
The timetable should bring an additional 700,000 barrels a day of supply onto the market in June, and a further 840,000 barrels a day in July, numbers that include the unwinding of additional voluntary cuts by Saudi Arabia, noted Warren Patterson, head of global commodity strategy at ING, in a note.
“The market appears focused on the more constructive outlook for later this year, with OPEC+ of the view that the market will see significant stock drawdowns between September and the end of the year,” he said.
Meanwhile, worries about the prospective return of Iranian crude to the market have faded. A round of indirect negotiations aimed at bringing the U.S. back into the agreement and Tehran back into compliance, which would set the stage for reversal of U.S. sanctions reimposed by the Trump administration, are not expected to produce a breakthrough in the near future.
While some diplomats had expressed hope that a deal could be reached ahead of Iran’s June 18 presidential election, an Iranian government spokesman on Tuesday said negotiators now expect to complete a deal in August when President Hassan Rouhani’s term ends, Bloomberg reported.