Bloomberg reported that the prospect of tighter global markets has caused oil to rise three days ahead of schedule

(Bloomberg)-As the market is optimistic that increased demand will tighten the global market, oil prices accounted for most of the three-day rise, trading above US$71 per barrel.

After rising more than 8% in the first three trading days, West Texas Intermediate crude oil fell 0.3% in early Asian trade. The increase means that prices have hardly changed this week, and almost recovered all the plunge on Monday, when crude oil plummeted because of concerns that the spread of the delta coronavirus variant would curb consumption, and the OPEC+ alliance added more oil.

As the introduction of the vaccine reopened the economy, stimulated energy demand and eliminated the surplus accumulated during the pandemic, crude oil prices have risen this year. Although the emergence and spread of highly contagious delta variants hindered this process, especially in parts of Asia, investors bet that the broader positive narrative remains intact. Data this week showed that gasoline demand in many of the largest oil-consuming countries has basically returned to normal, and crude oil inventories in the main Cushing hub have decreased.

Nonetheless, challenges remain. According to data from the Centers for Disease Control and Prevention, the United States is at “another critical moment,” with Covid-19 cases rising again, and some hospitals have full beds. In Europe, the number of infections in France has more than doubled in the past week.

The Organization of the Petroleum Exporting Countries and its allies plan to add 400,000 barrels of oil a day to the market in August and the following months until the supply cuts implemented at the beginning of the pandemic are completely reversed. If Tehran manages to reach a nuclear agreement that allows the United States to lift sanctions on its crude oil, this half of the additional supply may come from Iran.

The spot spread of Brent crude oil on Friday was 62 cents a barrel. This is a bullish pattern-near-term prices are higher than forward prices-at the same level as a week ago.

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