US crude futures touch highest in more than 2 years

The US crude futures rose to touch the highest in more than two-and-a-half years as the OPEC+ alliance said that there would be tightening in global market ahead.

Global benchmark Brent rose more than $70 while West Texas Intermediate rose as much as 3.8 per cent from $68.87 a barrel on Friday’s close.

According to an assessment by OPEC+ committee, the surplus of oil created due to coronavirus pandemic has almost gone and stockpiles will slide rapidly in the second half of the year.

Talks with Iran regarding the 2015 nuclear agreement is also being closely scrutinized by the traders as it will lead to an increased oil supply from Iran.

“OPEC is seeing tightness” while the “Iran situation is very much a jump ball at this point,” said John Kilduff, a partner at Again Capital LLC, reported Bloomberg. “It is all very bullish against the backdrop of demand that keeps surging, with the exception of India.”

The OPEC+ had committed to hike oil output in July and the group will increase the production in the month by 841,000 barrels a day, according to delegates.

With economic recovery in US and Europe, OPEC+ is confident that market can absorb additional barrels.

“The demand picture has shown clear signs of improvement,” Saudi Energy Minister Prince Abdulaziz bin Salman said as the ministerial meeting started. His Russian counterpart, Alexander Novak also spoke of the “gradual economic recovery,” reported Bloomberg.

OPEC Secretary-General Mohammad Barkindo said at Monday’s committee meeting said Iran’s comeback “will occur in an orderly and transparent fashion,” without upsetting the stability that other OPEC+ nations have toiled to achieve.

(With inputs from Bloomberg)

Picture Credits: Reuters