Oil prices slumped above $ 75 a barrel on Thursday to near three-year highs before key producers make a decision on production policy for the second half of 2021.
US crude West Texas Intermediate for August rose 2.4% or $ 1.76 to $ 75.23 a barrel, its highest level since October 2018. The international benchmark Brent crude for September climbed 2% or $ 1.49 to $ 76.10 a barrel.
The WTI has increased more than 50% since the beginning of 2021 to around $ 48.5 per barrel. Demand has risen as people take to the streets amid the economic reopening, and a rebound in freight and air travel has also supported prices.
Gasoline prices are rising on the back of a post-pandemic wave, and $ 75 crude oil prices could mean even higher prices at the pump. The current average price for a gallon of unleaded gasoline is $ 3.123 per gallon, according to the AAA, compared to $ 2.179 per gallon a year ago.
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The push came ahead of a meeting between OPEC and non-OPEC partners, an energy alliance often referred to as OPEC +, which positively assessed the improved market conditions and prospects for fuel demand growth following a sharp surge in oil prices this year.
The OPEC + meeting has been postponed to Friday.
Jeff Currie, Global Head of Commodities Research at Goldman Sachs, told CNBC's Worldwide Exchange that the expected OPEC production increase of 500,000 barrels per day may not be enough to keep prices down.
"In June, we estimate the market was in a deficit of 2.3 million barrels a day … The bottom line is that when we go into the summer travel season, demand increases against a near-inelastic supply curve," said Currie.
A little over a year ago, WTI futures plunged into negative territory for the first time on record when the coronavirus pandemic hit and crippled economies around the world.
Bank of America recently said that given accelerating demand, oil could soar as high as $ 100 a barrel.
– CNBC's Jesse Pound contributed to the coverage.
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