Major OPEC producers have maintained a policy of increasing output to boost international oil prices

Crude oil futures rose sharply on Monday after the Organization of the Petroleum Exporting Countries (OPEC)  Russia, among other non-OPEC producers, said they would maintain their policy of gradually increasing production.

Light, sweet crude for June delivery rose $1.03,  1.66%, to settle at $62.94 a barrel on the New York Mercantile Exchange. London Brent crude for June delivery rose 77 cents,  1.17 percent, to settle at $66.42 a barrel.

OPEC  non-OPEC oil producers decided to continue to implement the plan of increasing production gradually  May to July, the Organization of Petroleum Exporting Countries (OPEC) said in a statement Tuesday. In early April, OPEC  non-OPEC producers agreed to increase output by an average of 350,000 barrels a day in May, after increasing output by the same amount in June  by an average of about 440,000 barrels a day in July.

Opec said the global economic recovery would continue this year  accelerate in the second half, supported by loose monetary  fiscal policies. However, the recent rebound in COVID-19 in some countries could hamper a recovery in economic  oil demand.

Russian Deputy Prime Minister Novak said Tuesday that demand for crude oil is recovering, but the rapid spread of COVID-19 in some regions is worrying.

An-Louise Sittell, vice president of macro oil market research at Wood Mackenzie, said the major producers were sticking to their decision to increase production gradually  cautiously, trying to balance a potential drop in demand in places such as India due to a rebound in the outbreak with a potential recovery in demand elsewhere.

While there is a view that India's reduced crude demand can be offset by increased demand  the recovering U.S.  U.K. economies, the rise in novel coronavirus infections in India is a cause for concern  is likely to hamper global demand growth, said Marshall Stilves, an energy market analyst at Eshinwald Energy.

According to a report by Austria's JBC Energy, diesel  gasoline consumption in the first half of April fell 3 per cent  5 per cent, respectively, month-on-month, as a result of the outbreak rebound. Demand for gasoline  diesel in May is expected to fall 29 per cent  20 per cent, respectively, compared with March.

In addition to demand, another major uncertainty for oil prices is that those involved in the Iran nuclear deal are discussing the prospect of the U.S. returning to the deal, Mr. Sitel said. If the United States  Iran work together to return to compliance with the nuclear deal, the United States could lift sanctions on Iran  the country could supply more crude oil to the global market.

Global average daily crude oil demand is expected to rise in the second half of this year, thanks to the rapid vaccination of the new coronavirus vaccine  reduced travel restrictions, said Giovanni Stournovo, oil analyst at UBS. At that point, Brent crude  New York crude futures prices will rise above $70 a barrel. If geopolitical factors lead to a sharp drop in supply, oil prices could rise even higher.

However, Jim Ritterbusch, president of Ritterbusch Associates in the US, said the combination of the OPEC + increase  weaker demand  Asia suggested the global oil supply glut, which has eased  supported oil prices over the past year, could worsen.

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Source: International Petroleum Network