By Peter Nurse
Investing.com — Crude oil prices edged higher Thursday, trading near one-month highs on increasing optimism for demand growth as the global economy recovers.
By 10:10 AM ET (1510 GMT), futures traded 0.1% higher at $63.19 a barrel, having risen 4.9% in the previous session, while the international benchmark contract rose 0.1% to $66.65, after gaining 4.6% on Wednesday and closing at the highest level since March 17.
U.S. Gasoline RBOB Futures were down 0.1% at $2.0345 a gallon.
The crude market received a boost late Wednesday with the release of Energy Information Administration data showing U.S. fell 5.9 million barrels last week, more than double the expectations for a 2.9 million-barrel decline, and also larger than the 3.6 million barrels draw the reported on Tuesday.
Helping the view that the economic recovery in the U.S. was in full flight were the latest economic data Thursday, as rebounded sharply in March, climbing 9.8% on the month, while for state unemployment benefits totaled 576,000 last week, a substantial drop from 769,000 in the prior week.
U.S. GDP growth is expected to top 7.0% this year, which would be the fastest since 1984, after a 3.5% contraction last year, the worst performance in 74 years.
It was this growth expectation, along with that of China, the second biggest economy in the world, that prompted both the Organization of Petroleum Exporting Countries and the International Energy Agency to raise their global crude demand forecasts for this year earlier this week.
“This should not be a problem for the market, given that OPEC+ still has a significant amount of spare capacity, even after taking into account the 2.1MMbbls/d of supply increases we will see from them between May and the end of July,” said ING analysts, in a note.
That said, the wildcard is Iran, which is seeking to revive a 2015 nuclear deal and have U.S. sanctions removed to lift crude exports.
Iran and global powers resumed talks on Thursday to rescue the deal which sought to make it harder for Iran to develop an atomic bomb in return for lifting sanctions. The success of these talks remains very much in the balance, particularly after Tehran on Tuesday announced its decision to enrich uranium at 60% purity, a big step closer to the 90% that is weapons-grade material.
The other issue is how U.S. shale responds to the recent rise in oil prices, with the temptation growing for producers to ramp up output.
The Energy Information Administration sees U.S. oil production averaging 11.9 million barrels a day in 2022, up about 1 million barrels, from the average this quarter.
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