2021.05.1210:00:00UTC+00Oil Prices Rise On Solid Demand Outlook

Oil prices inched higher on Wednesday as investors bet on a bright outlook for demand. A weak U.S. dollar also offered some support.

Brent crude for July settlement rose 30 cents, or 0.4 percent, to $68.84 a barrel, while U.S. West Texas Intermediate crude futures for June delivery were up 39 cents, or 0.6 percent, at $65.67 a barrel.

As vaccination campaign gathers pace, the European Commission presented today a more upbeat assessment of how the 27 economies will perform this year.

The Brussels-based institution has sharply raised its economic forecasts for the coming two years, citing an improved vaccination campaign and the expectation that EU-wide fiscal stimulus will kick in the second half of 2021.

The International Energy Agency (IEA) said in its latest monthly report that demand for oil will exceed the output of the top producers.

The IEA estimates that world oil demand would average 96.4m bbl/day this year, up from 91m bbl/day last year when consumption plunged by 8.7m bbl/day owing to the pandemic and related lockdown measures.

Oil prices were also supported by the outlook from the Organization of the Petroleum Exporting Countries (OPEC), which on Tuesday stuck to a forecast for a strong recovery in world oil demand in 2021.

Meanwhile, the American Petroleum Institute reported late Tuesday that U.S. crude oil stocks fell by 2.5 million barrels in the week to May 7. Inventory data from the Energy Information Administration will be released later in the day.