Meanwhile, OPEC pegs 2021 world economic growth at 5.5 percent: File Image/Pixabay
Ongoing demand optimism resulted in oil prices hitting a two year high on Thursday, after news that U.S. unemployment claims fell last week to the lowest level in nearly 15 months and consumer prices increased solidly in May.
Brent rose 30 cents to settle at $72.52 per barrel, the highest close since May 2019, and West Texas Intermediate rose 33 cents to end at $70.29, the highest close since October 2018.
Louise Dickson, analyst at Rystad Energy, enthused, "More business activity means more energy consumption, and a better economy is a needed prerequisite for road and air traffic to increase."
John Kilduff, founding partner, Again Capital
The demand outlook continues to strengthen
John Kilduff, founding partner at Again Capital, added, "The demand outlook continues to strengthen and supplies are not necessarily keeping up."
Kilduff went on to say that "There's an inflation pulse rippling through the commodity sector, and crude oil is a big participant as a base hedge element against inflation."
In its latest monthly report, the Organization of the Petroleum Exporting Countries (OPEC) paid lip service to the "uncertainty" of potential new Covid variants down the road (even though scientists say the current vaccines are enough to ward off against infection) but maintained that demand would rise by 5.95 million barrels per day (bpd) this year, or 6.6 percent.
OPEC estimates 2021 world economic growth at 5.5 percent, assuming the impact of the pandemic will have been "largely contained" by the beginning of the second half.
But despite oil's remarkable comeback, the longer-term debate continues about the viability of investing in the commodity: Group of Seven leaders this week discussed plans to shift the balance of car-buying away from gasoline to greener vehicles by the end of the decade.
The discussion came on the heels of Shell announcing it would speed up its plan to reduce carbon emissions.