Oil continues to rise in price on expectations of a recovery in demand

On Monday, oil prices rose 2% on forecasts of increased demand and doubts about an increase in production by Iran in the near future.

August Brent crude futures on the London ICE Futures Exchange yesterday rose to the highest level since August 2019 – 7 74.6/barrel, and July WTI crude futures on electronic trading in the New York NYMEX reached 7 72.7/barrel, which is the highest since October 2018.

Traders hope for a rapid recovery in oil demand in developed countries due to active vaccination of the population and the gradual lifting of quarantine restrictions. So, according to a survey conducted by CBS News, Americans began to meet more often with friends, participate in mass events, and return to work in the office. For the first time since the beginning of the pandemic, the average daily volume of air traffic in the United States exceeded 2 million passengers.

Experts of the International Energy Agency (IEA) expect that in 2021 global oil demand will grow by 5.4 million barrels/day to 96.4 million b/d, and in 2022 – by another 3.1 million b/d and at the end of the year will reach the pre-pandemic level.

ING analysts are concerned about the delay in negotiations on a nuclear deal with Iran. If they are not completed before June 18 of this year, when the country will hold presidential elections, then there is a risk that the new government may change its position on certain issues, which will further delay the process of signing the agreement. Earlier, it was expected that Iran will increase production from the current 2.4 million b/d in the third quarter of this year to 2.6 million b/d, but this will not happen if negotiations are delayed.

Following oil prices, palm oil prices also rose 6% yesterday, recouping the previous drop of 8.5%.