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Brent crude futures for June edged down 12 cents, or 0.2%, to
$63.08 a barrel by 0731 GMT, while U.S. West Texas Intermediate
(WTI) crude for May was at $59.59 a barrel, down 1 cent.
Both contracts are on track to post a 2%-3% drop this week after
the Organization of the Petroleum Exporting Countries (OPEC) and
its allies, a group known as OPEC+ that includes Russia, agreed
to gradually increase supplies by 2 million barrels per day
between May and July.
Analysts expect global oil inventories to continue to fall,
however, as fuel demand accelerates in the second half of this
year as the global economic recovery gathers steam.
"A lot of destocking is going on so we are well into the
rebalancing process," Energy Aspects analyst Virendra Chauhan
said.
Physical markets will still need to pick up, though, before
prices and intermonth spreads can rally, he added.
Concerns are surfacing that renewed lockdowns in parts of the
world to curb rising COVID-19 cases and problems with
vaccinations could alter the oil demand picture.
Stephen Innes, chief global markets strategist at Axi, said oil
prices are expected to trade in a range between $60 and $70 as
investors weigh these factors.
This week, world powers and Iran held talks on reviving their
2015 nuclear deal, which may pave the way for the United States
to lift sanctions on Iranian oil exports in the second half this
year.
"If a fulsome framework can be crafted in the coming weeks,
significant quantities of Iranian oil will likely hit the market
in H2 2021," RBC Capital analyst Helima Croft said in a note
this week.
(Reporting by Florence Tan; Editing by Muralikumar Anantharaman
and Tom Hogue)
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