The oil price has risen to its highest level since April 2019 on Monday. On a settlement of $ 66.27, a barrel of West Texas Intermediate became 1.4 percent more expensive.
Oil prices received support from signals that demand for oil is recovering in the US and that expectations for demand in Europe are also positive. Colonial pipeline relaunch after cyber attack also played a role.
“Investors are looking to the long term and are looking to the projected recovery in demand in the US, Europe and much of Asia,” said Robbie Fraser of Schneider Electric.
Dollar weakness also contributed to higher oil prices, noted market analyst Troy Vincent of DTN.
“Coupled with the fundamental drop in global stocks in the run-up to the summer, these factors keep Brent prices comfortably within the range of $ 65 to 72 per barrel, despite some disappointing macroeconomic figures,” Vincent said.
On Friday, Baker Hughes reported an increase in the number of active drilling platforms in the US by eight to a total of 352.
“Oil production has yet to make a significant leap in the light of higher oil prices and will be closely monitored in the coming weeks,” says Fraser.
In the world’s second largest economy, China, economic recovery seems to be slowing down. Retail sales increased by 17.7 percent in April compared to last year, which is significantly less than the 34.2 percent increase in March. In addition, industrial production increased by 9.8 percent year-on-year in April compared to 14.1 percent in March. A similar picture was also seen in the US figures for retail and industry.
However, according to analysts, there is optimism in the oil market, due to expectations for oil demand in the second half of this year. Among others, the oil cartel OPEC and the International Energy Agency expect a sharp recovery in demand.
“The situation on the oil market is currently pretty stable, with robust demand compensating for increased production of OPEC+ and Iran,” says Commerzbank analyst Eugen Weinberg.
Weinberg noted that Iran is probably preparing for a reduction in sanctions against the country by the Americans, which were introduced because of Iran’s nuclear program.
“Even the ongoing problems in India, the third largest importer of oil, cannot stand in the way of recovery in oil demand,” Weinberg said. However, given the many short-term factors, Weinberg expects a sustained “volatile lateral movement” for oil prices.