Oil is on track for a fifth consecutive weekly gain

Oil prices rose for a third straight session on June 25. Remarkably, it is on track for a fifth consecutive weekly gain. Demand growth is anticipated to outstrip supply on bets that OPEC+ producers will be cautious in returning more output to the market from August. Notably, it lifted oil prices.

Brent crude futures increased by 0.1% or 6 cents and traded at $75.62 a barrel on Friday. It is on track for a 2.9% rise for the week.

Meanwhile, U.S. West Texas Intermediate crude futures gained 0.1%, which equals 5 cents, and hit $73.35 a barrel. WTI is on track for a 2.4% weekly rise.

Both benchmark contracts hit their highest levels since October 2018 in the previous session.

According to Ravindra Rao, vice president for commodities at Kotak Securities, expectations of tightness in the global market are the major factor supporting crude oil as demand is recovering. Demand got some support as OPEC+ has constrained supply and U.S. stocks are declining.

The approval of the U.S. infrastructure bill boosted optimism for the energy demand outlook also supported oil.

The market is in the hands of the OPEC and its allies

Traders are waiting for the Organization of the Petroleum Exporting Countries, Russia, and allies together known as OPEC+ meeting. The group is scheduled to meet on July 1. OPEC+ is expected to discuss further easing of their output cuts from August.

Commonwealth Bank commodities analyst Vivek Dhar says the market is in the hands of OPEC+.

The major factors OPEC+ will have to consider are strong growth in the United States, Europe, and China. Remarkably, growth is bolstered by vaccine rollouts and economies reopening, offset by increasing coronavirus infections and outbreaks in other locations.

ANZ analysts have predicted OPEC+ would step up supply with a small rise of 500,000 barrels per day in August. Remarkably, they agreed to return 2.1 million BPD to the market from May through July.