Oil Steady Near 2018 High as Investors Assess Demand Outlook

(Bloomberg) -- Oil was steady in Asia after settling at the highest level since October 2018 as upbeat comments on the market from major trader Vitol Group added to optimism over the global demand recovery.

Futures in New York traded near $69 a barrel after posting a second weekly gain following a raft of bullish calls on the market. OPEC+ appears in control of crude prices, with U.S. production lagging pre-pandemic levels, Mike Muller, Vitol’s head of Asia, said at a conference on Sunday. The alliance is returning supply after output cuts helped to tighten the market.

A robust rebound from the virus in the U.S., China and Europe has driven prices more than 40% higher this year, although the Covid-19 comeback in Asia is a reminder that the recovery will be uneven. Russia’s Rosneft PJSC, meanwhile, warned of an impending shortfall in supply as global producers increasingly channel funds into a “hasty” energy transition.

The market has firmed in a bullish structure. The prompt timespread for Brent is 40 cents in backwardation -- where near-dated prices are more expensive than later-dated ones. That compares with 37 cents a week earlier.

The decline in U.S. drilling and output makes OPEC+’s job of managing markets easier, Vitol’s Muller said at an event hosted by consultant Gulf Intelligence. Given delays in talks between Tehran and world powers on reviving a nuclear deal, it’s less likely more Iranian crude supply will hit the market before the fourth quarter, he added.

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