The world’s leading oil producers are expected to announce an increase in output this week amid signs that demand is rising.
Oil cartel Opec is due to hold a meeting on Tuesday and Wednesday to discuss its next move.
Analysts predict major producers will agree to ease supply cuts that were imposed in April to prop up prices.
Opec and its allies, known as Opec+, cut daily oil output by 9.7m barrels as the pandemic saw demand collapse.
That agreement was made to help ease the effects of an oil glut caused by the lockdowns and to stabilise prices.
Brent crude, which is the global benchmark for oil, is down around 30% this year, while US-traded West Texas Intermediate (WTI) fell below zero at one point in April.
Expectations are growing that from next month those curbs will be reduced to 7.7m a day, meaning that output will increase by 2m barrels a day.
The more optimistic outlook comes after the International Energy Agency (IEA) last week suggested that the worst of the impact caused by coronavirus lockdowns may now be over.
In its monthly global energy report the IEA predicted a slight improvement in global demand for crude oil this year.
However, it also cautioned that much still depends on how the pandemic develops.
The report also noted that the resurgence of cases in some parts of the world, including the US and Latin America, was “casting a shadow” over the outlook and threatened to derail a recovery in demand.
«The recent increase in Covid-19 cases and the introduction of partial lockdowns introduces more uncertainty to the forecast,» it said.
Singapore-based oil expert Vandana Hari cautioned about a swift recovery for the commodity. «Global oil demand is currently expected to come close to pre-coronavirus levels only in the second half of 2021.
It may not reach the exact levels until much later, as international air travel and jet fuel demand is not seen normalizing for the next 2-3 years,» she said.
In the US, Florida has registered a state record of 15,299 new coronavirus cases in 24 hours – around a quarter of all of the United States’ daily infections.
The US as a whole has been exceeding new daily totals of 60,000 cases for the past few days. Other states including Arizona, California and Texas continue to see a rising cases.