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Oil steady near $70 on hopes of recovering demand - CNBC

Aerial view of a drilling rig operated by operated by China Petrochemical Corporation (Sinopec Group) sitting in Shengli Chengdao offshore oilfield on Dec. 2, 2020 in Dongying, Shandong Province of China.
Xu Jianjun | Visual China Group | Getty Images

Oil hovered near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

Benchmark Brent fell 22 cents, or 0.3%, to $69.41 a barrel while U.S. West Texas Intermediate crude was at $65.82 a barrel, down 20 cents, or 0.3%.

Brent is on track to end the week flat after prices touched a 13-month high on Monday, following seven straight weeks of gains.

The Organization of the Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged.

"The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes," PVM analysts said.

RBC Capital analysts said the fundamentals for summer gasoline was the most bullish in nearly a decade.

The United States, world's largest oil consumer, saw a big draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output.

Sustained higher oil prices are expected to encourage U.S. producers to increase output, which could eventually weigh on prices, JPMorgan analysts wrote.

JPMorgan expects U.S. oil output to average 11.36 million bpd this year compared with 11.32 million bpd in 2020.

Commerzbank expects oil to ease to about $60 during 2021.

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Oil steady near $70 on hopes of recovering demand - CNBC
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