Oil Prices Climb As Stockpiles Fall, Supply Tightens

Oil prices rose on Wednesday, extending the previous day's small gains after an industry report showed U.S. crude stockpiles fell last week.

Brent crude was up 31 cents, or 0.4% at $75.07 a barrel by 05:30 WAT, after edging higher on Tuesday. U.S. crude was up 46 cents, or 0.6% at $73.44 a barrel, having risen 0.1% in the previous session.

Investor hopes for a broader recovery in demand for fuel have been unshaken by worries of the highly contagious Delta variant of the coronavirus which is taking hold in many countries, prompting new lockdowns or movement restrictions from Australia to Portugal.

Hopes were boosted by Mohammad Barkindo, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), who said on Tuesday that demand is expected to rise by 6 million barrels per day (bpd) in 2021, with 5 million bpd of that coming in the second half of the year.

He laid out the forecast during a meeting of the Joint Technical Committee of OPEC+, an alliance made up of OPEC members along with Russia and other producers.

The meeting will decide on the group’s production policy as it moves to release some of the supplies it withheld from the market to support prices after the evaporation of demand in COVID-stricken 2020.

On the last day of June, Brent is heading for another monthly gain, which would mean the contract has risen for six out of the last seven months. U.S. crude has traded similarly since November.

Goldman Sachs forecasts that demand will rise by a further 2.2 million bpd by the end of 2020, leaving a 5 million bpd shortfall in supply.