Oil prices reached fresh multi-year highs on Friday, heading for a third straight week of gains on an improved outlook for worldwide demand as rising vaccination rates lead to a lifting of pandemic curbs.
Brent crude futures rose 30 cents to $72.82 a barrel by 1:34 p.m. EDT (1734 GMT), a day after closing at their highest since May 2019. On the week so far, Brent was up 0.4%.
U.S. West Texas Intermediate (WTI) crude futures were up 76 cents at $71.05 a barrel, a day after their highest close since October 2018. WTI was up 1% so far for the week.
“Demand is coming back faster than supply and we’re going to need more supply to meet that demand,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
The International Energy Agency (IEA) said in its monthly report that the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, would need to boost output to meet demand set to recover to pre-pandemic levels by the end of 2022.
“OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” the Paris-based energy watchdog said.
It said that rising demand and countries’ short-term policies were at odds with the IEA’s call to end new oil, gas and coal funding.
“In 2022 there is scope for the 24-member OPEC+ group, led by Saudi Arabia and Russia, to ramp up crude supply by 1.4 million barrels per day (bpd) above its July 2021-March 2022 target,” the IEA said.
U.S. investment bank Goldman Sachs said it expects Brent crude prices to reach $80 per barrel this summer as vaccine rollouts boost global economic activity.
Data showing road traffic returning to pre-COVID-19 levels in North America and most of Europe was encouraging, ANZ Research analysts said in a note.
“Even the jet fuel market is showing signs of improvement, with flights in Europe rising 17% over the past two weeks, according to Eurocontrol,” ANZ analysts said.
In an indication of future supply, U.S. oil rigs rose by six to 365 this week to their highest since April 2020, energy services firm Baker Hughes Co said in its weekly report. [RIG/U] It was the biggest weekly increase of oil rigs in a month.