Image source: Exxon Mobil
By Shadia Nasralla
LONDON (Reuters) – Oil hovered near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.
Benchmark Brent rose 3 cents, or 0.04%, to $69.66 a barrel by 1058 GMT while U.S. West Texas Intermediate crude was at $66.03 a barrel, up 1 cent, or 0.02%. Both recovered from losses earlier in the session during Asian trade.
Brent is set for its eighth straight week of gains after prices touched a 13-month high on Monday.
The Organization of Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged.
“The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes,” PVM analysts said.
RBC Capital analysts said the fundamentals for summer gasoline was the most bullish in nearly a decade.
The United States, world’s largest oil consumer, saw a big draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output, according to the Energy Information Administration.
Sustained higher oil prices are expected to encourage U.S. producers to increase output, which could eventually weigh on prices, JP Morgan analysts wrote.
JP Morgan expects U.S. oil output to average 11.36 million bpd this year compared with 11.32 million bpd in 2020.
Commerzbank expects oil to ease to about $60 during 2021.
Additional reporting by Florence Tan; Editing by Edmund Blair.