Brent Crude is Falling But Remains Near $70 Supported by Optimistic Demand

Brent crude prices declined today, but hovered near $70 a barrel, as cuts made by major crude producers restrict supplies, while the market is also supported by optimism about the recovery in demand in the second half of the year.

Brent crude futures for May delivery fell 33 cents, or 0.5%, to $ 69.30 a barrel in Asian trading, while US West Texas Intermediate crude for April delivery reached $65.65 a barrel, down 37 cents, or 0.6%.

After gains that lasted for seven consecutive weeks, Brent crude may end its nearest-month contract this week almost unchanged as investors sold crude for profit after prices hit a 13-month high on Monday following an attack on Saudi oil facilities.

Sentiment was also supported by a decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC +, earlier this month to keep production cuts largely intact in April.

Investors are pouring money into commodities like oil thanks to expectations of a recovery in demand in the second half of the year as the global economy grows, while a wider distribution of COVID-19 vaccines allows more people to travel this summer.

OPEC said on Thursday that the recovery in oil demand would be concentrated in the second half of the year.

The United States, the largest consumer of oil in the world, witnessed a large withdrawal of US gasoline stocks last week as a winter storm in Texas caused disruptions in the production of refineries.

JPMorgan analysts said in a weekly note that the continuation of oil prices at high levels is expected to push US producers to increase production.

The bank now expects that US production will reach an average of 11.78 million barrels per day in December 2021, an annual increase of 710 thousand barrels per day, while the amount for the whole year will reach 11.36 million barrels per day on average compared with 11.32 million barrels per day in 2020.