OPEC+ representatives agreed to move ahead with plans to release more oil to the market next month
Brent crude oil surged past $70 per barrel for the first time since March on Tuesday.
The news comes as OPEC+ stayed true to their plan of releasing more barrels of oil into an improving market.
The benchmark for oil used across the world now stands at $70.78, as OPEC+ producers, headed up by Russia and Saudi Arabia, said they were restricting output as there are a number of uncertainties at play. This is despite there being an increase in demand globally.
According to a poll by Reuters, US crude stockpiles were expected to fall by 2.1m barrels last week. In addition, oil prices were pushed up by Chinese data that showed manufacturing rose at its fastest rate this year in May.
Prices were also boosted by Chinese data showing that the country’s factory activity grew at its fastest pace this year in May.
Following a virtual meeting OPEC+ representatives agreed to move ahead with plans to release more oil to the market next month.
A number of traders, as reported by the Financial Times, have suggested that the vaccine roll-out, along with stimulus packages, have pushed demand for oil. The resultant deficit is what caused the price of crude oil to surge by over 30% since the end of last year.
“Unless widespread cheating develops or a renewed uptick in global coronavirus cases evolves, OPEC’s current recipe for success would appear to represent a viable plan,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.