London oil prices fell back after hitting $75 a barrel for the first time in more than two years as traders waited to see how OPEC+ would respond to a rapidly tightening market.
Brent crude rose above $75 in Asian trading as price indicators and inventory data showed demand continued to exceed supply. As Russia is understood to be considering proposing an increase in OPEC+ production at next week's meeting, the oil price alliance is said to be considering proposing that the organization increase production when it meets next week.
The market remained strong in the bullish structure, with one time spread for West Texas crude widening to its widest spot premium in seven years. Inventories in Cushing, the main US warehousing hub, fell again last week from their lowest level since March 2020, according to a, Genscape Inc. report, according to people familiar with the matter.
The spread between Brent crude and Middle Eastern crude is also the widest in 21 months. This could boost Asian refiners' interest in Persian Gulf crude related to Dubai crude and reduce interest in Atlantic basin crude.
While the resurgence of outbreaks in parts of Asia is a reminder that the economic recovery will be uneven, Brent crude is up more than 40 per cent so far this year as the us, china and Europe have rebounded strongly from the epidemic, supporting an increase in fuel consumption. According to Bank of America,The global crude oil benchmark could even rise to $100 a barrel next year as travel demand rebounds.
"demand optimism is now established and market tightening is the focus of great attention," said Vandana Hari, founder of Vanda Insights. "if the rally is suspended, it may come from supply factors."
Price trend
Brent crude for August delivery on the ICE European Futures Exchange fell 34 cents to $74.56 after hitting its highest intraday level since April 2019.
The immediate time spread on the spot premium for Brent crude was 81 cents, compared with 57 cents at the beginning of last week.
The July West Texas Intermediate contract, which expires on the New York Mercantile Exchange on Tuesday, fell 55 cents to $73.11 a barrel.
The more active August contract fell 49 cents to $72.63.