Oil continues to rally amid signs of improved global demand

Negotiations with Iran over the nuclear deal were adjourned overnight with the parties expected to convene next week

A crude oil tanker is seen at China's Qingdao Port. Opec+ did not discuss the possibility of Iranian supply recommencing either at its joint technical meeting on Monday or at the ministerial meetings on Tuesday. Reuters

Oil prices continued their rally on Thursday, with Brent, the international benchmark, trading above $71 per barrel.

The international crude benchmark Brent, was trading as high as $71.93 at 7:26am UAE time on Thursday, while West Texas Intermediate (WTI), which tracks US crude grades, rallied to $69.37.

Crude prices have gained due to the improving economic sentiment across the US and Europe and due to indications from Opec over stable growth in demand. Oil prices are up about 40 per cent year-to-date and are at their highest since October 2018.

At a ministerial meeting earlier this week, Opec+, which is headed by Saudi Arabia and Russia, said it decided to stick to its earlier decision to return 2 million barrels per day to the market "with the pace being determined according to market conditions".

"Traders are feeling a lot more optimistic about the reopening of the global economy and the continuation of the vaccination process," said Naeem Aslam, chief market analyst at AvaTrade.

"Traders also understand that the US and Iran's nuclear deal cannot be reinstated that easily and it will take a while before the previous conditions are enacted. This means no immediate increase in oil supply and this is also supposing oil prices."

Opec+ also did not discuss the possible return of Iranian crude supply either at its joint technical meeting on Monday or at the ministerial meetings on Tuesday.

The potential return of Iranian oil and its impact on prices will be considered in "an orderly and transparent fashion", Opec secretary general Mohammed Barkindo said.

Tehran, which resumed negotiations with the US to reinstate its nuclear deal, is looking to conclude talks before its presidential election begins on June 18.

Negotiations over the Iran nuclear deal were adjourned overnight with the parties expected to convene next week.

"The market may be pricing in a later than expected return of Iranian crude as a deal has so far not been forthcoming," Edward Bell, senior director, market economics at Emirates NBD, said in a note on Thursday.