Oil Holding The $74 Handle Awaiting OPEC+ Meeting
Oil remained steady near $74 a barrel at the open in Asia, keeping investors’ eyes on OPEC+ meeting at the end of the week, which might pave the way for increased supply.
After a fifth weekly gain, New York futures were barely changed, while Brent stayed around its highest level since October 2018. The alliance will be discussing its August production policy during the meeting on Thursday, with the group expecting to restart more halted output. As the worldwide vaccine distribution raises demand, the market has formed a bullish structure.
Oil has risen more than 50% this year, owing to a strong recovery from the pandemic in key markets such as the United States and China, which underpin fuel consumption. The quick recovery has also depleted inventories built up under Covid-19, prompting the International Energy Agency to call on OPEC+ to maintain market equilibrium.
As resurrecting talks on a nuclear deal lengthen, an expansion in Iranian crude flows is unlikely to materialize anytime soon. The election of hardline cleric Ebrahim Raisi as Iran's new president, according to some commentators, could cause a delay in reaching an agreement.
In backwardation, where near-dated contracts are more costly than later-dated ones, the prompt timespread for Brent was 80 cents a barrel. In comparison, the price amounted to 85 cents a week ago.
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