Oil futures: Brent trading above $73/b on firm demand outlook

14 Jun 2021

London (Quantum Commodity Intelligence) – Crude oil futures rose Monday as positive sentiment from the previous week carried over, while a lack of news from the latest talks with Iran continued to underpin prices.

Brent futures for front-month August were trading at $73.26/barrel (1630 BST), compared to Friday’s settle of $72.69/b, the highest level since May 2019 after retracing from $73.62/b in the morning.

At the same time, July WTI was trading $71.09/b, versus Friday’s settle of $70.91/b, the highest price since October 2018.

"Good sentiment on the financial markets and the optimistic demand outlook indicated by leading energy agencies are contributing to the upswing," Commerzbank said in a report Monday.

Prices over the past week were underpinned by demand growth optimism, positive reports from OPEC and the IEA, plus a lack of progress on reaching a nuclear agreement with Iran.

The IEA said Friday that oil demand should surpass pre-Covid levels by 2022.

On Friday, Goldman Sachs said Brent will hit $80/b in the summer, seeing oil demand rising from 96.5 million bpd in May to 99 million bpd in August.

The latest round of talks in Vienna aimed at breaking the deadlock on Iranian nuclear talks failed to find a breakthrough, but China has called for a speedy resolution.

Meanwhile, Rafael Mariano Grossi, the director-general of the International Atomic Energy Agency (IAEA), said in an interview Sunday that his agency was "flying blind" due to not having a deal in place with Iran.

Grossi said it is "essential to have a deal" with Iran "because Iran has a very big, ambitious, sophisticated, developed nuclear program."

Last week, the US lifted some secondary sanctions on Iran. 

The closely watched Brent/WTI spread also narrowed and briefly touched $2.00/b -- the narrowest spread since November 2020, according to exchange data.

It was trading around $2.15/b by time of press.