ICE Brent Nears $70 as OPEC Lifts 2021 Oil Demand Forecast

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Thursday's session sharply higher, with both benchmarks gaining as much as 2.5% after the Organization of the Petroleum Exporting Countries revised higher its projection for 2021 global oil demand, citing an accelerated recovery in the United States, where fresh stimulus measures and an effective vaccine rollout are expected to boost an already expanding economy.

Global oil demand is projected to grow by 5.89 million barrels per day (bpd) this year, according to OPEC's Monthly Oil Market Report released Thursday morning, which would bring total global oil consumption to 96.27 million bpd from a previous outlook of 96.05 million bpd. Upward revisions to its demand outlook were made for the third and fourth quarters, with OPEC citing this week's $1.9 trillion fiscal stimulus bill, which was signed into law Thursday by President Joe Biden, as one of the reasons behind the adjustments.

Domestic labor markets continue to show signs of improvement, with weekly unemployment claims falling to the lowest level since the start of the pandemic at 712,000 as large states, including Texas, New York, and Virginia push for re-openings and lifting restrictions.

Aside from the United States, however, OPEC sees plenty of economic uncertainty in the European Union and Latin America, where lackluster vaccine rollout campaigns and new virus variants are seen undermining an already flagging recovery. In particular, the Eurozone is seen as a big drag on global oil demand after several European countries Thursday suspended the use of Oxford's AstraZeneca vaccine. Denmark, Norway, and Italy announced Thursday they would halt the rollout of the AstraZeneca vaccine due to concerns that some patients have developed blood clots after inoculations. Health authorities insist the vaccine is safe.

On Thursday, the European Central Bank left interest rates unchanged at 0%, matching market expectations, while boosting its $2.2 trillion bond-purchasing program "significantly" to prop up the sluggish collective economy. At a news conference Thursday, ECB President Christine Lagarde said the central bank would seek to counter a recent increase in bond yields, part of which she said reflected higher growth expectations in the United States rather than a recovery in Europe.

"We are moving into action as early as tomorrow," Lagarde said.

The Eurozone economy is expected to grow by about 4% this year compared with 6.5% in the United States, according to the Organization for Economic Cooperation and Development.

On the supply side, OPEC, citing secondary sources, reported crude production from the 13-member cartel declined 647,000 bpd to 24.848 million bpd in February, with all countries part of the OPEC+ production-cutting agreement in full compliance with the accord. The three OPEC countries that are not part of the accord -- Iran, Venezuela, and Libya -- saw modest production increases of 33,000 and 35,000 bpd. Iran's crude production in February was 2.12 million bpd, and Venezuela's output averaged 521,000 bpd. Libya's production rate in February was 1.186 million bpd.

On the session, West Texas Intermediate for April delivery jumped above $66 barrel (bbl), gaining $1.58 from Wednesday's settlement and Brent May crude advanced $1.73 to settle at $69.63 bbl. NYMEX April ULSD futures surged 4.21 cents to $1.9594 gallon and front-month RBOB futures rallied 5.85 cents or 2.8% for a $2.1380 gallon settlement.

Liubov Georges can be reached at liubov.georges@dtn.com

Liubov Georges