Brent crude futures breach $70/b as OPEC+ committee keeps demand forecast steady

0303 GMT: The front-month ICE Brent crude futures benchmark breached $70/b in mid-morning trade in Asia June 1 after the OPEC+ Joint Technical Committee kept its global oil demand forecast steady amid optimism over rising demand from the US and Europe, and reinforced the view that the market was well-placed to absorb any additional supply from Iran.

At 11:03 am Singapore time (0303 GMT), the ICE Brent August contract was up 84 cents/b (1.21%) from the previous settle at $70.16/b, while the July NYMEX light sweet crude contract was up $1.26/b (1.9%) at $67.58/b.

The OPEC+ JTC met May 31, prior to the full OPEC+ ministerial meeting set for later June 1 and, according to an internal document, kept its global oil demand growth forecast for 2021 unchanged at 6 million b/d, while slightly increasing its forecast for a supply deficit to 1.4 million b/d.

The unchanged demand forecast came as concerns over protracted demand-sapping mobility restrictions in Asia were alleviated by the prospect of a surge in demand in Europe and the US.

"The market appears to be more focused on the positive demand story from the US and parts of Europe," ING's head of commodities strategy Warren Patterson and senior commodities strategist Wenyu Yao said in a June 1 note.

"In the US, the summer driving season officially got underway following the Memorial Day weekend, and we have entered this period with gasoline inventories already trending lower, and not too far from a five-year low for this time of the year," the ING analysts added.

Meanwhile, OPEC Secretary General Mohammed Barkindo eased nerves in the market further when he downplayed the threat of increased Iranian supply, which could arise if the ongoing negotiations in Vienna result in the restoration of the Joint Comprehensive Plan of Action.

"We anticipate that the expected return of Iranian production and exports to the global market will occur in an orderly and transparent fashion, thereby maintaining the relative stability that we have," Barkindo said during the OPEC+ JTC meeting.

Earlier May 31, Iran's Oil Minister Bijan Zanganeh had said that Iran could "easily" boost its oil production capacity to 6.5 million b/d once the JCPOA was restored, but Platts Analytics estimates only an additional 1.05 million b/d of Iranian crude supply coming into the market between May and December to the 2.43 million b/d it produced in April.

The market is now awaiting the full OPEC+ ministerial meeting scheduled for later June 1, where the coalition is widely expected to proceed with plans to relax output quotas by 700,000 b/d and 840,000 b/d in June and July respectively.

"We believe that the market will be able to absorb this additional supply, and so would expect the group to confirm that they will increase output as planned over the next 2 months... our balance sheet also shows that the group has room to increase output later this year, despite the potential for further Iranian supply," the ING analysts said.