NEW YORK -Oil prices dipped on Monday, pulling back from two-year highs reached on expectations of improved demand and OPEC producers keeping supply curbs in place.
Source: Reuters
Brent crude hit $72.27, the highest since May 2019, but by 11:18 a.m. EDT (1517 GMT) was down by 49 cents, or 0.7%, to $71.40. U.S. West Texas Intermediate touched $70 for the first time since October 2018, but was last down 48 cents or 0.7% to $69.14.
Crude has risen for the past two weeks, and Brent is up by more than 35% this year, helped by the beginnings of recovery in demand after the pandemic as well as supply curbs by the Organization of the Petroleum Exporting Countries and allies.
“With some improvement in the pandemic situation in India and the recovery in the U.S., China and Europe remaining on track, oil should remain a buy on dips,” said Jeffrey Halley, analyst at brokerage OANDA.
Global demand has risen as the United States and Europe have loosened COVID-19 restrictions, while India has begun to ease its latest lockdown.
The Organization of the Petroleum Exporting Countries and its allies have boosted oil prices by sticking to supply restraints through July. On Monday, OPEC Secretary General Mohammad Barkindo said the producer group expects inventories to fall further in coming months.
“Certainly the supply and demand equation has tilted in favor of the bulls,” said John Kilduff, a partner at Again Capital in New York. “There’s a consensus that there is a structural supply deficit that’s going to widen as we get deeper into the year.”
Investors may have sold off some contracts when WTI hit $70, said Avtar Sandu of Phillips Futures in Singapore. The chance of more Iranian crude oil supply soon reentering the market and a drop in China’s crude imports also limited prices, analysts said.
(Additiona reporting by Alex Lawler and Florence Tan; editing by Emelia Sithole-Matarise, Jason Neely, David Evans and David Gregorio)
