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Oil Poised for Third Weekly Gain as IEA Sees Need for More Crude

Oil is on track for a third straight weekly rise as the crude market’s demand revival gains traction. The International Energy Agency warns the market will need extra supply next year. Futures in New York are up 1.6% so far this week. They hit the highest intraday level since 2018 on Friday.

(Bloomberg) –The IEA said that OPEC and its allies will need to lift output to keep the market adequately supplied, though the agency predicted demand won’t reach pre-virus levels until late 2022. Meanwhile, road traffic in the U.S. and much of Europe is largely back to levels before the pandemic.

Price at the pump“The fact that the outlook for summer gasoline demand is looking much more robust, and travel is picking up, that’s all bullish for oil,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy.

U.S. crude futures hold above the key $70-a-barrel level. Traders are grappling with the prospects of Iranian supply returning to the market. Talks between the Persian Gulf nation and world powers about a 2015 nuclear deal are set to resume over the weekend. Meanwhile, there are also risks to the demand outlook in parts of Asia and Latin America as many nations continue to grapple with Covid-19 cases.

“Iranian crude could come back into the market at some point this year, which will be a challenge for OPEC+ if demand has not picked up,” Investec Bank Plc Head of Commodities Callum Macpherson said. Still, the “main question” is whether the aviation industry will come back and bring back jet fuel demand.



  • West Texas Intermediate for July delivery rose 50 cents to $70.79 a barrel at 10:42 a.m. in New York

  • Brent for August settlement advanced 32 cents to 72.84 a barrel

Among the more prominent moves in the oil market this week, the discount of U.S. benchmark crude futures against its global counterpart rallied to the narrowest since November. That’s driven some buyers from abroad to start shying away from Permian crudes with the narrow arbitrage making West Texas oil cargoes less attractive.

The IEA said OPEC+ will need to add about 1.4 million barrels a day — less if Iran clinches a deal to remove U.S. sanctions. That would leave the group with another 5.5 million barrels a day of capacity offline, it said. Bloomberg calculations suggest the buffer isn’t quite as high.

Separately, gasoline cracks in New York fell by the most since March on Friday. U.S. President Joe Biden is weighing options to give relief to U.S. oil refiners from biofuel blending mandates, Reuters reported.


— By Andres Guerra Luz
With assistance by Alex Longley
June 10, 2021, 7:52 PM EDT Updated on June 11, 2021, 10:56 AM EDT