Oil prices rose 2% on Thursday, supported by the prospect of strengthening demand, lower U.S. inventories and a Reuters report that OPEC+ producers have planned to increase output in the coming months.
Brent crude gained $1.38, or 1.9%, to $76 a barrel by 1051 GMT. U.S. West Texas Intermediate crude was up $1.49, or 2%, at $74.96.
The OPEC+ group of oil producers meets on Thursday to decide on its output policy.
The group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia is moving towards adding about 2 million barrels per day (bpd) of oil to the market between August and December, an OPEC+ source told Reuters.
The source said monthly increases would amount to less than 0.5 million bpd.
“We believe the oil market has room to absorb more crude supply from OPEC+,” said UBS analyst Giovanni Staunovo, predicting that larger oil inventory declines will lift prices higher in the third quarter.
WTI rose more than 10% in June while Brent added more than 8%, touching their highest since October 2018.
Analysts expect oil demand to gather pace in the second half of the year as more people are vaccinated against COVID-19 and travel restrictions are eased.
“In the first half of the year, the stage has been set for further improvement and for economic and oil demand growth,” said Tamas Varga, oil analyst at London brokerage PVM Oil.
Outbreaks of the Delta variant of the coronavirus, meanwhile, are raising concerns that the demand recovery could falter. Renewed lockdowns and rising costs weakened momentum in Asia’s factory activity in June.
In the United States, crude stockpiles fell last week for the sixth straight week in response to rising demand, data from the Energy Information Administration showed.
A drop in crude inventories at Cushing, Oklahoma, the delivery point for WTI, to their lowest since March 2020 also underpinned the U.S. benchmark, squeezing its discount to Brent to its narrowest since September 2020 on Wednesday.
A Reuters poll last month showed Brent was expected to average $67.48 a barrel this year and WTI $64.54, both up from forecasts in May.