Oil ends week near $70 buoyed by strong US economic data

Oil prices were little changed on Friday, with Brent holding near $70 a barrel as firm US economic data and expectations of a strong rebound in global demand offset concerns about more supply from Iran once sanctions are lifted.

Brent crude was down 16 US cents, 0.2%, to $69.30 a barrel by 8.09am GMT, while US West Texas Intermediate crude was up 3c, or less than 0.1%, at $66.88 a barrel.

“Boosted by good economic data and risk appetite among investors on the financial markets,

Brent is making a renewed bid for the psychologically important $70 per barrel mark,” said Commerzbank analyst Eugen Weinberg.

“Concerns about demand because of the pandemic are giving way to optimism in view of the rapid return of consumers,” he added.
Brent and WTI are both on track to post weekly gains of 4% and 5%, respectively.

Analysts expect global oil demand to rebound closer to 100-million barrels per day in the third quarter on summer travel in Europe and the US following widespread Covid-19 vaccination programmes.
“[Petrol] demand has now exceeded 2019 levels in many areas,” ANZ analysts said in a note.

Robust economic data from the US, the world’s largest economy and oil consumer, also lent support as the number of Americans filing new claims for unemployment benefits fell to the lowest since mid-March 2020, beating estimates.
However, rising coronavirus infections in Asia put pressure on prices.

Infections in the South Asia region surpassed 30-million on Friday, according to a Reuters tally, led by India which is struggling with a second Covid-19 wave and a vaccine shortage across the region.

Exceptions on the return of Iranian oil to markets also capped the gains.

Iran and global powers have negotiated in Vienna since April to work out steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with Iran’s 2015 nuclear pact with world powers.

Balancing expectations of a recovery in demand against a possible increase in Iranian supply, oil cartel Opec and allies including Russia, a group known as Opec+, is likely to stick to the existing pace of gradually easing oil supply curbs at a meeting on Tuesday, Opec sources said.

“Our balance sheet shows that the market should be able to absorb this additional supply from Opec+, along with a gradual increase in Iranian output,” said ING analyst Warren Patterson.