Oil prices were little changed on Friday, with Brent holding near $70 a barrel as firm U.S. economic data and expectations of a strong rebound in global demand in the third quarter offset concerns about more supply from Iran once sanctions are lifted.
Brent crude futures for July fell 9 cents, 0.1%, to $69.37 a barrel by 0643 GMT while U.S. West Texas Intermediate crude for July was at $66.90 a barrel, up 5 cents, or 0.1%.
Prices are "running up against a wall", Howie Lee, economist at Singapore's OCBC bank said, referring to technical charts that showed prices have hit resistance levels. "$65-$70 should still be the holding zone for oil unless there is a very good reason to go above $70," he said.
Brent and WTI are both on track to post weekly gains of 5% to 6% as analysts expect global oil demand to rebound closer to 100 million barrels per day in the third quarter on summer travel in Europe and the United States following widespread COVID-19 vaccination programmes.
"Gasoline demand has now exceeded 2019 levels in many areas," ANZ analysts said in a note, adding that this may be partly offset by weakness in Asia, where fresh waves of COVID-19 infections have resulted in lower consumption.
Robust economic data from the United States, the world's largest economy and oil consumer, also buoyed risk appetite. The number of Americans filing new claims for unemployment benefits fell to the lowest since mid-March 2020, beating estimates.
Balancing expectations of a recovery in demand against a possible increase in Iranian supply, the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, is likely to stick to the existing pace of gradually easing oil supply curbs at a meeting on Tuesday, OPEC sources said.
"Another 1 million bpd of oil would certainly slow the current drain on inventories," ANZ said, adding that this will ultimately limit the price rise. Iran and global powers have negotiated in Vienna since April to work out steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with Iran's 2015 nuclear pact with world powers.
Analysts expect Iran to add between 500,000 bpd and 1.5 million bpd of crude and condensate to the market once sanctions are lifted.
Oil prices little changed as Iran concerns offset rosy demand outlook