However, Total boss warns of volatility in the short-term: File Image/Pixabay
Investors cashing in on the recent crude rally was the reason cited for oil's minuscule price fall on Tuesday, but as far as sentiment on demand recovery goes it was still full steam ahead for industry players.
Brent eased 10 cents to $74.80 per barrel by 0110 GMT, while West Texas Intermediate for July was at $73.44 per barrel, down 22 cents, and WTI for August fell 15 cents to $72.97 per barrel.
Toshitaka Tazawa, analyst at Fujitomi Co., remarked, "Oil prices took a breather, but the markets' tone remains firm amid expectations that fuel demand will pick up quickly along with economic recovery in Europe and the United States."
Jeff Currie, Goldman Sachs
Inventories are dropping like a brick
One indication of demand was stockpiles: a Reuters poll showed that U.S. crude stocks were expected to drop for the fifth consecutive week, on the heels of U.S. crude stockpiles dropping sharply in the week to June 11 as refineries boosted operations to their highest since January 2020.
Scott Shelton, energy specialist at United ICAP, said the crude physical market overall "Is in solid shape: Brent spreads in the front are also on new highs, and this tells me that the physical market is catching up to the futures and making oil look like it's not an inflation hedge and is actually worth this."
A Singapore-based trader added, "I think Brent can go stronger, now the stragglers in the Atlantic Basin are finally strengthening like Mediterranean and West Africa."
Meanwhile, the growing sentiment that oil may hit the $100 mark was supported on Tuesday by Patrick Pouyanne, chief executive of Total: he told delegates to the Qatar Economic Forum that "There is quite a chance to reach $100 but we could see again in the coming years some lows as we have been accustomed to volatility."
Pouyanne's prediction was echoed by the CEOs of Exxon Mobil and Royal Dutch Shell.
As for crude gains in the near term, Jeff Currie, global head of commodities research at Goldman Sachs, told Bloomberg television that sees a lot of upside risk when it comes to oil prices and predicts $80 per barrel in the third quarter, since demand is skyrocketing and "inventories are dropping like a brick."