Oil prices maintain strong gains thanks to global demand outlook

Mohammed Abdelkhalik
May 28, 2021
Oil prices

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Global oil prices rose during today’s session in the European market, at the end of the week’s trading, to keep US crude gains for the third consecutive session, recording the highest level in two and a half months, and Brent crude, the benchmark, remained near the level of $70 per barrel, recording the highest in about two weeks.

Other than that, and what gave more support to prices recently, the official data issued by the US Energy Information Administration, which showed a decrease in commercial crude stocks in the United States, “the largest consumer of fuel in the world.”

Oil prices continue rising

At exactly 09:25 GMT, West Texas Intermediate “American crude” rose by about 0.8%, to trade the price of a barrel around the level of $ 67.43, the highest since the eighth of last March, from the opening level of today’s session at $ 66.89, and the lowest price was recorded at 66.77 dollars per barrel.

Oil prices

The international crude also rose by 0.6% to the level of 69.82 US dollars per barrel, the highest since the eighteenth of May, compared to the opening level at 69.41 dollars, and it reached early in the session the lowest price at 69.04 dollars per barrel.

At the conclusion of yesterday’s trading, US crude was able to achieve a gain of 1.2% in the second daily gain in a row, and the benchmark Brent crude gained 0.9%, thus recording its fifth daily gain in a row.

Demand recovery forecast

Strong economic data from the United States, the largest economy and consumer of oil in the world, provided support for crude prices, and indicators of a rapid recovery of the American economy reinforced the negative repercussions resulting from the Coronavirus crisis, which is in favor of high levels of fuel demand during the coming period.

The data showed that the number of Americans filing new applications for unemployment benefits fell to the lowest level since mid-March 2020, which was better than expected.

In light of the remarkable progress in the pace of vaccination against the Covid-19 virus, especially in the United States, Europe, and the United Kingdom, and after some governments have already announced easing restrictions and closures related to the pandemic, most analysts’ expectations indicate an acceleration in the pace of global demand for fuel during the third quarter of this year 2021.

On the other hand, sources in the “OPEC Plus” alliance said this week that it is likely that the alliance will adhere to the current pace of gradual easing to curb oil supplies during the next June meeting, especially after balancing the expectations of demand recovery against a possible increase in Iranian supplies.

US inventory report

The US Energy Information Administration said on Wednesday, in official data issued on a weekly basis, that commercial crude stocks in the country fell by about 1.7 million barrels over the (last week) ending on the twenty-first of this month, in the third weekly decline in a month. Economic forecasts indicated a decrease of about one million barrels.

According to these data, total US stocks have now fallen to 484.38 million barrels, the lowest since late February, which indicates a clear improvement in actual demand levels in the “largest oil consumer in the world.”

As for production levels, the administration announced that US production stabilized last week without change, to remain at a total of 11.0 million barrels, and the United States still ranks first as the largest oil producer in the world.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.