Business - Market Data Updated: June 25, 2021

Oil Prices Extend Gains on Tight Supply Outlook

By Oluwatosin Ogunjuyigbe

June 25, 2021

Oil prices rose for a third straight session on Friday, on track for a fifth consecutive weekly gain.

Black gold continued its bullish run as demand growth is expected to outstrip supply on bets that OPEC+ producers will be cautious in returning more output to the market from August.

Brent crude futures rose 6 cents, or 0.1%, to $75.62 a barrel at 07:46 WAT, heading for a 2.9% jump for the week.

U.S. West Texas Intermediate (WTI) crude futures were up 5 cents, or 0.1%, at $73.35 a barrel, headed for a 2.4% weekly gain.

Both benchmark contracts settled at their highest levels since October 2018 on Thursday.

Oil also got some support on Friday as the approval of the U.S. infrastructure bill boosted optimism for energy demand outlook, analysts said.

All eyes are on the Organization of the Petroleum Exporting Countries, Russia and allies - together called OPEC+ - who are due to meet on July 1 to discuss the further easing of their output cuts from August.

On the demand side, the key factors OPEC+ will have to consider are strong growth in the United States, Europe, and China, bolstered by vaccine rollouts and economies reopening, offset by rising COVID-19 cases and outbreaks in other locations, analysts said.

ANZ analysts have predicted OPEC+ would step up supply with a small increase of 500,000 barrels per day in August, adding to the 2.1 million bpd they agreed to return to the market from May through July.

The prospect of sanctions being lifted on Iran and more of its oil hitting the market anytime soon has dimmed, with a U.S. official saying "serious differences" remain over a range of issues over Iran's compliance with the 2015 nuclear deal.