Oil prices broke above $75 a barrel on Thursday to a near three-year-high ahead of a decision from key producers on production policy for the second half of 2021.
U.S. West Texas Intermediate crude for August rose 3.2%, or $2.33, to $75.82 a barrel, hitting its highest level since October 2018. The international benchmark Brent crude for September climbed 2%, or $1.49, to $76.10 per barrel.
The WTI has climbed more than 50% on the year after starting 2021 at around $48.5 per barrel. Demand has increased as people take to the roads amid the economic reopening, and a rebound in goods transportation and air travel also have supported prices.
Gasoline prices are jumping on the back of a post-pandemic driving spree and $75 crude prices could mean even higher prices at the pump. The current average price for a gallon of unleaded gasoline is at $3.123 per gallon, compared to $2.179 per gallon a year ago, according to AAA.
The advance came ahead of a meeting among OPEC and non-OPEC partners, an energy alliance often referred to as OPEC+, who have been positive about improved market conditions and the outlook for fuel demand growth following a sharp rebound in oil prices this year.
OPEC+ will convene via videoconference at 2 p.m. London time.
Jeff Currie, global head of commodities research at Goldman Sachs, said on CNBC's "Worldwide Exchange" that the expected OPEC production hike of 500,000 barrels per day might not be enough to keep prices down.
"During the month of June, we estimate that the market was in a 2.3 million barrel per day deficit... The bottom line, demand is surging as we head into the summer travel season, and that is against a nearly inelastic supply curve," Currie said.
Just over a year ago, WTI futures plunged into negative territory for the first time on record as the coronavirus pandemic took hold, shutting down economies worldwide.
Bank of America recently said oil can climb all the way to $100 per barrel amid accelerating demand.
— CNBC's Jesse Pound contributed reporting.
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