Oil futures: Brent touches $71/b, WTI nears $69/b on demand optimism

London (Quantum Commodity Intelligence) – Crude oil futures rallied strongly ahead of the OPEC+ meeting later Tuesday, as demand optimism lifted oil futures to the highest levels since mid-March.  

Brent futures for front-month August were trading at $70.95/barrel (1235 GMT), compared to Monday's settle of $69.32/b, a gain of 2.2%.

WTI futures surged 2.5%, with front-month July WTI trading $68.66/b, compared to Monday's settle of $66.32/b.

The OPEC+ Joint Technical Committee (JTC), which monitors broader supply/demand fundamentals, kept its 2021 demand growth forecast unchanged at around 6 million barrels per day, and said it sees global inventories continuing to fall throughout the third quarter.

"With demand so strong, the market is increasingly confident that OPEC+ can open the taps even further. This comes despite further signs that additional Iran oil will be hitting the market later this year," said Daniel Hynes, senior commodity strategist at ANZ.

The OPEC+ producer group is widely expected to proceed with already-agreed output hikes in June and July, but further increases beyond July are likely to be subject to Iran returning to the international fold.

The timeline for lifting Iranian sanctions was further clouded Monday when a report from the UN's nuclear watchdog, the IAEA, said Iran had failed to explain traces of processed uranium found at several undeclared sites.

Meanwhile, a sharp increase in demand at the start of the US driving season also underpinned prices, with the tracking firm GasBuddy reporting Sunday's US gasoline demand up nearly 10% on the average of the previous four Sundays.

Asia remains the primary concern on the COVID-19 front with several new restrictions announced in recent days, including Malaysia, China and Australia.