Oil prices fell on Thursday but were trading near their highest level in a month. They were sustained by more optimistic forecasts for demand issued this week by the International Energy Agency and OPEC. The world economy recovers from the coronavirus pandemic.
Brent crude futures were down 14 cents, or 0.09%, at $66.48 a barrel, after hitting $66.94 earlier in the session, their highest since March 18.
US WTI crude futures were down 24 cents, or 0.16%, at $63.01 a barrel, after advancing earlier to $63.48, also a month-high.
Both contracts soared about 5% on Wednesday.
According to Commerzbank, the macro environment continues to be favorable in terms of the economic scenario. This week, the IEA and the OPEC raised their estimates of growth for global oil demand for 2021 to 5.7 million BPD and 5.95 million BPD, respectively.
The market also found support in a sharp drop in US oil inventories.
US crude stocks fell by 5.9 million barrels the previous week, the EIA said on Wednesday. East Coast oil reserves hit a record low.
Weaker Dollar Assists Oil Prices
Jim Ritterbusch, president of Ritterbusch and Associates, stated that oil is beginning to reconnect with equities’ strength with the help of a weaker dollar.
The US dollar was on track to fall to a four-week low against a basket of currencies. A weaker dollar makes oil cheaper for traders using other currencies, which traders say helps support oil prices.
Goldman Sachs analysts said that supply discipline and the recovery of economies would allow the oil to break out of the current range. The bank remains positive on Brent oil. In quarter 3, it forecasts oil prices soaring at $80 per barrel. Such a confident outlook is a result of the recovery in short-term demand and supply discipline.
New US sanctions imposed on Russia, one of the world’s leading oil producers, on suspicion of election interference and hacking could also support oil prices in the short term.
Wednesday data from the US showed that the country’s oil inventories slumped by 5.9 million barrels.
The coronavirus pandemic has strongly hit crude oil prices. However, record cuts in oil production by OPEC and its allies have supported black gold prices. From May, some of OPEC and its partner countries’ reductions will be alleviated. On April 28, the group will hold another meeting to consider further changes to the supply agreement.