Oil advanced in Asian trading with the market focused on the Organisation of the Petroleum Exporting Countries (OPEC+) supply policy meeting early this week and any commentary around the prospect for returning Iranian supply.
Futures in New York rose toward $67 (Sh7,169) a barrel after falling 0.8 per cent on Friday. OPEC and its allies are expected to stick with a decision to boost output in July when the group gathers Tuesday, according to a Bloomberg survey last week.
While rebounding demand is driving prices higher, the possibility of more barrels from Iran should a nuclear deal be revived is clouding the outlook.
Iran and world powers have resumed discussions, Russia’s envoy to the United Nations in Vienna said in a tweet, adding that there was an understanding among the countries involved that “the current round should be final.”
Oil is poised for a second straight monthly gain as the US, China and parts of Europe lead a robust demand recovery from the Covid-19 pandemic, despite a virus comeback across Asia.
American gasoline stockpiles have declined and consumption gained in the lead up to the Memorial Day weekend, which heralds the start of the summer driving season and peak fuel demand.
“The best course of action for the alliance tomorrow may be to stay on an even keel, maintaining the current pace of tapering,” said Vandana Hari, founder of oil consultancy Vanda Insights.
“The latest waves driven by virus variants and a slow pace of vaccinations suggests it will be a very gradual exit from the pandemic through the second half.”
The prompt time spread for Brent was 38 cents a barrel in backwardation - a bullish market structure where near-dated contracts are more expensive than later-dated ones.
That compares with nine cents a week earlier.
When OPEC+ meets on Tuesday, investors will also be looking for any clues on the next stage of the group’s supply policy amid growing expectations for demand to accelerate through the end of the year.
As for July, all but four of 24 analysts and traders surveyed by Bloomberg predicted the alliance would ratify a planned increase of 840,000 barrels a day.
A gauge of China’s manufacturing industry, meanwhile, was little changed in May as soaring input prices weighed on smaller factories, suggesting the economy’s recovery momentum might have peaked for now.
Indian data later yesterday is forecast to show the nation’s gross domestic product during the first quarter posted a slight pickup in growth year-on-year.
Meanwhile, Iran started its first transfer of crude oil via its strategic Goreh-Jask pipeline, allowing the country to bypass the Strait of Hormuz, the state-run Islamic Republic News Agency reported.
Total SE shareholders gave broad endorsement to Chief Executive Officer Patrick Pouyanne’s plan to reduce carbon emissions by gradually scaling back oil-product sales in favour of renewables and liquefied natural gas.