Oil prices are currently bullish following 3 days of losses. The price is, however, still on track to record a loss for the week as investors brace for the return of Iranian crude supplies after officials said Iran and world powers made progress in a nuclear deal.
Brent crude oil futures are currently up 1.86%, trading at $66.32 while U.S. West Texas Intermediate is currently up 2.20% trading at $63.30 as of the time of writing this report.
Iran and world powers have been in talks since April on reviving the 2015 deal and officials of the European Union said on Wednesday, they are confident a deal would be reached.
Today’s spike in the price means that investors remain positive about fuel demand recovery this summer as vaccination programs in Europe and the United States would allow more people to travel, although there are still worries of rising cases across parts of Asia particularly, India.
JP Morgan analysts mention that option bets on oil prices have risen above $100 as the December 2021 Brent contracts have jumped after last week’s surprisingly strong U.S. inflation data. The bank’s forecast is for Brent to end 2021 at $74. To reach $100, demand would need to average above 102.6 million BPD in the third quarter and grow to 103.6 million BPD in the fourth quarter.
Barclays Bank expects Brent and WTI oil prices to average $66 a barrel and $62 a barrel, respectively, this year as their estimation cuts demand estimates for the Emerging Markets Asia (ex-China) region, flagging the risk of further downside if the recent surge in infections continues. The bank said, “Extended mobility restrictions in the region might slow the demand recovery somewhat, but seem unlikely to stall it for a sustained period, given largely positive results of vaccination programs worldwide.”