Oil futures: Brent retraces from $72/b, WTI $70/b, up 4% on week

London (Quantum Commodity Intelligence) – Crude oil surged to fresh two-year highs Friday as the week-long rally propelled futures higher, but the contract was poised to settle below $72/b.

Brent futures for front-month August were trading at $71.60/b (1618 GMT), compared to Thursday's settle of $71.31/b and Friday 28 May's settle of $68.68/b.

They had broken through $72/b earlier in the day.

At the same time, July WTI was trading $69.28/b, versus Thursday's settle of $68.81/b.

Market watchers again referred to a bullish demand outlook for the soaring prices, while OPEC+ discipline on production and Iranian talks stalling cited as strong supporting factors.

"Oil prices are finding tailwind from the clear signs that demand is making a solid recovery. Besides OPEC+, the IEA has also expressed this view this week," said Commerzbank in a market note Friday.

Earlier Friday, the Middle East Dubai crude oil benchmark traded above $70/b for the first time since May 2019.

The latest inventory data from the US Energy Information Administration Thursday was initially met with a muted price reaction, despite the steep drawdown of 5.1 million barrels in crude stocks over the seven days to May 28.

"Some of the shine was taken off, as the data also showed a rise in gasoline and distillate inventories (1,499 million barrels and 3,720 million barrels, respectively)," said Daniel Hynes, Senior Commodity Strategist at ANZ.

But demand outlook for the US remains firm, particularly for gasoline over the summer driving season.

Looking ahead to next week, traders will be watching for any signs of renewed efforts to reach an agreement with Iran ahead of the country's elections later in the month, but as this week's round of talks in Vienna ended there was little sign of resolution. 

Speaking to Bloomberg TV following the talks, FGE consultant's Fereidun Fesharaki said, "(the chance of) full agreement is only 50:50, maybe even less."