Oil Prices Steady After Surge
Oil prices steadied on Tuesday after a surge in the previous session, as traders weighed the impact of rising supplies and stockpiles. Brent crude, the international benchmark, was trading at $63.90 a barrel, up 0.2 percent, while U.S. West Texas Intermediate (WTI) crude was at $60.48 a barrel, up 0.3 percent.
Supply and Stockpiles in Focus
The market was focused on the supply and stockpiles of oil, as traders weighed the impact of rising supplies and stockpiles. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, have been cutting production since January to support prices. However, the market has been under pressure from rising supplies from the United States and other non-OPEC producers.
At the same time, U.S. crude stockpiles have been rising, hitting a record high of 535.5 million barrels last week. The increase in stockpiles has been driven by rising production and weak demand due to the coronavirus pandemic.
Oil Demand Expected to Increase
Despite the rising supplies and stockpiles, oil demand is expected to increase in the coming months as the global economy recovers from the pandemic. The International Energy Agency (IEA) said in its latest report that global oil demand is expected to grow by 5.7 million barrels per day (bpd) in 2021, the strongest growth since 2010.
The IEA also said that the global oil market is expected to be in balance in the second half of 2021, as demand growth outpaces supply growth. This could lead to a further tightening of the market and higher prices.
Oil Prices Supported by Vaccine Rollouts
Oil prices have also been supported by the rollout of coronavirus vaccines, which has raised hopes of a faster economic recovery. Vaccine rollouts have been accelerating in the United States and Europe, and the IEA said that the pace of the rollout is expected to pick up in the coming months.
The IEA also said that the global oil market is expected to be in balance in the second half of 2021, as demand growth outpaces supply growth. This could lead to a further tightening of the market and higher prices.
Oil Prices Could Rise Further
Analysts said that oil prices could rise further if the global economy continues to recover and demand for oil increases. However, they cautioned that rising supplies and stockpiles could limit the upside potential for prices.
In addition, the market is also keeping an eye on the OPEC+ meeting later this month, where the group is expected to decide on whether to extend its production cuts. If the group decides to extend the cuts, it could provide further support for oil prices.
Oil Prices Volatile
Oil prices have been volatile in recent weeks, as traders weigh the impact of rising supplies and stockpiles against the prospects of a global economic recovery. The market is expected to remain volatile in the near term, as traders continue to monitor the supply and demand dynamics of the market.