Oil prices rose early on Monday, with the U.S. benchmark hitting a 32-month high and Brent rising above $73 per barrel as the market is growing increasingly bullish on demand while the return of Iranian oil looks more distant than initially thought.
As of 10:06 a.m. EDT on Monday, WTI Crude prices were up by 1.14 percent at $71.72, after touching a 32-month high in earlier trading. Brent Crude was up by 1.06 percent, surpassing the $73 a barrel mark and trading at $73.46.
Oil prices continued their move upward this week, after rising last week on the back of bullish demand reports by both OPEC and the International Energy Agency (IEA).
Global oil demand will rise by 6 million barrels per day (bpd) this year from the lows of 2020, led by strong consumption in China and the United States, especially in the second half of 2021 with growing economies and border reopenings, OPEC said on Thursday in its monthly report.
A day later, the IEA urged OPEC “to open the taps” to ensure adequate supply amid expectations of surging demand.
“Our first detailed look at 2022 balances confirms earlier expectations that OPEC+ needs to open the taps to keep the world oil markets adequately supplied. Global oil demand will continue to recover and, in the absence of further policy changes, by end-2022 reach 100.6 mb/d,” the IEA said in its Oil Market Report on Friday.
The talks about Iran and the U.S. returning to the nuclear deal resumed this weekend, but analysts are now skeptical an agreement could be reached ahead of the Iranian presidential election this coming Friday.
The rally was led by WTI which reached a fresh 32-month high, driven by money managers switching exposure from metals and agriculture to oil, due to expected strong rebound in oil demand, Saxo Bank said on Monday.
“As a result, speculators have increased their combined WTI and Brent long to a five-week high with inflows skewed towards WTI where the net long reached a near three-year high. Brent’s next upside target is $75.6 followed by $78, the downtrend from the 2008 high,” the bank added.
By Tsvetana Paraskova for Oilprice.com