Oil prices inched up on Thursday, extending gains made in previous sessions on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.
Brent crude advanced $1.56, or 2.2%, to settle at $73.79 per barrel, after rising 4.2% in the previous session. U.S. West Texas Intermediate (WTI) crude added $1.61, or 2.3%, to settle at $71.91 per barrel, after gaining 4.6% on Wednesday.
"Some soft spots have emerged in the oil demand recovery, but this is unlikely to change the outlook fundamentally," Morgan Stanley said in a note.
Members of the Organization of the Petroleum Exporting Countries and other producers including Russia, collectively known as OPEC+, agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand.
But as demand was still set to outstrip supply in the second half of the year, Morgan Stanley forecast that global benchmark Brent will trade in the mid to high-$70s per barrel for the remainder of 2021.
"In the end, the global GDP (gross domestic product) recovery will likely remain on track, inventory data continues to be encouraging, our balances show tightness in H2 and we expect OPEC to remain cohesive," it said.
Crude inventories in the United States, the world's top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.
Inventories at the Cushing, Oklahoma crude storage hub and delivery point for WTI, however, has plunged for six continuous weeks, and hit their lowest since January 2020 last week.
"Supplies fell further by 1.3 million barrels to lowest level since early last year, theoretically offering support to the WTI curve," said Jim Ritterbusch of Ritterbusch and Associates.
Barclays analysts also expected a faster-than-expected draw in global oil inventories to pre-pandemic levels, prompting the bank to raise its 2021 oil price forecast by $3 to $5 to average $69 a barrel.
"Notwithstanding the tail risks, supply-demand dynamics point to a slow grind higher in prices over the next few months," Barclays said in a report.