Oil futures: Prices hold at 2-week highs, October Brent tops $75.50/b

Quantum Commodity Intelligence – Crude oil futures in late European trading hours Friday were consolidating at around two-week highs, as sentiment remained broadly positive ahead of the September Brent expiry.

Front-month ICE September Brent futures closed $76.32/barrel, compared to Thursday's settle of $76.05/b, and a weekly gain of 3%.

The new front-month October Brent contract was trading $75.58/b at 1810 GMT, versus the previous close of $75.10/b

September WTI was trading $73.95/b, versus Thursday's settle of $73.62/b, and up 2.7% on the week. 

Oil prices have now largely recovered the losses since reports surfaced mid-month that Saudi Arabia and the UAE had reached a compromise over baseline production levels, paving the way for an output rise of 2 million bpd by the end of the year.

"Our analysis shows the deal is about right for 2021, with planned OPEC+ production increases broadly in-line with the recovery in demand. Prices should stick in the US$70s/bbl," said energy consultancy FGE in a report released Thursday.

But the consultancy also added; "things become more difficult in 2022, when we expect a US tight oil recovery and some easing in Iran sanctions. OPEC+ will have to adjust the deal, and prices will drop into the $60s/b."

The market has also been buoyed this week by the drop in US inventories, the weaker dollar, plus tensions between the US and Iran over the pace of talks to resolve the nuclear impasse.

The Covid-19 Delta variant has taken a backseat this week, with London-based Eagle Commodities brokers noting the market took its cue from the Federal Reserve's Jerome Powell's view, "that the Delta variant spike in the US is not expected to derail economic growth."

Japan reported more than 10,000 daily coronavirus cases for the first time Thursday, as the government announced extensions to current restrictions.

Commerzbank said in a client note; "Despite the numbers of new cases remaining at a high level, the oil market no longer appears to be viewing the issue of the Delta variant with quite the same alarm as it was at the beginning of last week."

The eurozone economy expanded more than expected in the April to June quarter, up 2% on the first quarter. But Germany, Europe's biggest economy, expanded by only 1.5% between April and June from the first quarter.