Oil was up Thursday morning in Asia, in a third day of gains. Investor expectations that a surge in fuel demand in the U.S., China, and Europe, as well as major fuel producers, will exceed supply later in 2021 gave the black liquid a boost.
Brent oil futures rose 0.60% to $71.78 by 12:22 PM ET (4:22 AM GMT) and WTI futures gained 0.60% to $69.24.
U.S. crude oil supply data from the American Petroleum Institute showed a draw of 5.360 million barrels for the week ending May 28. Forecasts prepared by Investing.com predicted a 2.114-million-barrel draw and a 439,000-barrel draw was recorded during the previous week.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.
Market forecasters, including the Organization of the Petroleum Exporting Countries and its allies (OPEC+), expect that fuel demand will surpass supply in the second half of 2021.
Fuel demand will be 99.8 million barrels per day (bpd) while supply of 97.5 million bpd by the end of 2021, according to OPEC+ data. This will mainly be driven by increased demand in the U.S. and China, the top two oil importers globally, as well as the U.K. which is lifting its COVID-19 lockdowns.
"The U.S. driving season is a period that sees higher?than?normal fuel consumption. UK traffic is now sitting above pre?pandemic levels…we continue to see the oil demand recovery led by the U.S., Europe and China," CBA commodities analyst Vivek Dhar said in a note.
On the supply front, OPEC+ agreed at its 20-minute meeting on Tuesday to continue to gradually ease supply curbs through July. There were no clues on future supply policies as the cartel remains cautious about the second half of 2021.
A potential increase in Iranian supply has also been delayed as talks between the U.S. and Iran to revive a 2015 nuclear accord slowed down.
Although optimism remains that a deal could be struck when the talks resume in the following week, some investors remain skeptical.
"The current talks in Vienna to revive the 2015 nuclear accord, which would see U.S. sanctions on Iran lifted, now look unlikely to find a resolution," said CBA's Dhar. Investing.com