Oil poised for further rally amid indications of stronger global growth

Prices strengthened last week after an Opec+ meeting decided to stick to current production curbs

A flare stack is pictured next to pump jacks and other oil and gas infrastructure near Odessa, Texas. Oil demand is expected to grow at 6 million bpd with total consumption expected to hit 96.6 millioShow more

Oil prices are poised for further highs with futures in New York expected to cross the $70 mark next week.

Crude commodity benchmarks Brent and West Texas Intermediate registered weekly gains of 4.6 per cent and 4.1 per cent, respectively.

Brent, the international benchmark, surged 0.81 per cent on Friday to settle at $71.89 per barrel.

WTI, which tracks US crude grades, rose 1.18 per cent to close at $69.62 per barrel.

The higher prices follow a meeting of Opec+ producers earlier this month.

The group stuck to its previously-announced decision to bring 2 million barrels per day of production back to the market, in spite of concerns about an influx of Iranian production should Tehran finalise its nuclear deal with the US.

"Rising inflation concerns, increased demand for green transformation metals, Opec+ keeping a stranglehold on supply and weather concerns are all likely to continue fuelling a broad rally [in commodities] during the coming months," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note on Sunday.

"In the very short-term, however, several commodities have seen [a] loss of momentum while others have become overbought, thereby raising the risk of a swift correction including most metals and coffee," he added.

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 earlier this month.

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

Crude prices have gained due to the improving economic sentiment across the US and Europe and indications from Opec that demand growth remains stable.

"No visible progress on Iran's negotiations for rolling back oil export sanctions ahead of elections on June 18 gives Opec+ more time to rely on oil demand growth swallowing any eventual ~1.5 million bpd increase in Iran oil exports," Bank of America said in a note on Sunday.

"Yet we note at 100 million bpd demand by late 2022, Opec+ [and] Iran would still carry more than 3 million bpd more spare capacity versus pre-Covid conditions, despite taking 100 per cent market share of demand growth."