Oil futures: Crude moves higher as IEA sees strong demand growth

London (Quantum Commodity Intelligence) – Crude oil futures pushed higher in early London trade Friday, after the International Energy Agency (IEA) said global oil demand is set to return to pre-pandemic levels by the end of 2022.

Brent futures for front-month August were trading at $72.82/barrel (1645 GMT), compared to Thursday's settle of $72.52/b.

At the same time, July WTI was trading $71/b, versus Thursday's settle of $70.29/b.

Following a record decline of 8.6 million bpd in 2020, the IEA said global oil demand is forecast to rebound by 5.4 million bpd in 2021 and a further 3.1 million bpd next year.

By end-2022, demand should surpass pre-Covid levels.

"Our first detailed look at 2022 balances confirms earlier expectations that OPEC+ needs to open the taps to keep the world oil markets adequately supplied," the IEA said in its latest monthly oil report.

"Global oil demand will continue to recover and, in the absence of further policy changes, by end-2022 reach 100.6 million bpd," it added.

Thursday's flash crash which sent Brent and WTI futures tumbling $1.50/b following misleading headlines on Iranian sanctions only temporarily derailed the bullish momentum, although it helped to refocus the market on the possible return of Iranian barrels with round six of talks set to go ahead in Vienna this weekend.  

Iran remains upbeat on reaching an agreement, saying it was preparing for a speedy return to pre-sanctions production levels.

US diplomats, however, have repeatedly said a deal is some way off.

Regarding the lifting of sanctions against an Iranian official Thursday, one Middle East analyst told Quantum, "a goodwill gesture before they breakup, and resume (talks) after the elections."

"I'd put chances of a deal and immediate return of Iranian barrels at 10%. So much needs to be worked out."