The price of Brent crude oil fell on Friday but hovered around US$70 per barrel. Major oil producers cut production and restricted supply, which also supported the optimism that demand for this resource would rebound in the second half of the year.
Brent crude futures for May slipped 17 cents, or 0.2%, to $69.46 a barrel by 0109 GMT while U.S. West Texas Intermediate crude for April was at $65.79 a barrel, down 23 cents, or 0.4%.
Front-month Brent is on track to post weekly gains for the eighth week after touching a 13-month high on Monday following attacks on Saudi Arabian oil facilities.
Sentiment was also buoyed by the decision of the Organization of Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, earlier this month to largely hold production cuts in April.
As the global economy grows, demand is expected to pick up in the second half of the year. Investors have been injecting capital into commodities such as oil. At the same time, the launch of a broader vaccine against the COVID-19 pandemic allows more people to travel this summer .
“Assuming vaccination programmes are successful, we expect pent-up demand for gasoline to be released this summer during the U.S. and European driving season,” FGE analysts said in a note.
RBC Capital analysts said the fundamentals for summer gasoline is the most bullish in nearly a decade.
“We think this will support the entire oil complex this summer and beyond.”
The United States, world’s largest oil consumer, saw a massive draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output.
OPEC said on Thursday that the recovery in oil demand will be concentrated in the second half of this year.