Oil Prices recover amid declining Inventories

July 22, 2021

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Oil prices witnessed a sharp recovery on Thursday, continuing a robust gain in previous sessions amid expected declines in supplies by the end of the year as the world economies recover from the corona virus crisis.

Brent crude rose $1.36 cents, or 1.88 percent, to $ 73.5 a barrel after rising 4.2 percent in the previous session. West Texas Intermediate crude in the US rose 81 cents, or 1.99 percent, to $ 71.7 a barrel, after rising 4.6 percent on Wednesday.

“Some weaknesses have emerged in the recovery in oil demand, but this is unlikely to drastically change the outlook,” Morgan Stanley said in a statement.

The OPEC+ group last week, reached an agreement to increase oil supplies by 400,000 barrels every day from August to December to lower prices and meet rising demand.

But Morgan Stanley said demand still tends to outstrip supply in the second half of the year, with the result that Brent prices will trade from an average to a high of $ 70 a barrel by the end of 2021.

Barclays analysts also expect global oil inventories to decline faster than expected to the levels witnessed before the pandemic, pushing the bank to raise oil prices forecast in 2021 by $ 3-5 to average $ 69 per barrel.