(Bloomberg) — Oil crept higher with prices trading near their highest level since 2018.

Futures in New York erased earlier losses to trade above $69 a barrel. A significant draw in American crude stockpiles added positive signs to a market buoyed this week by the deferring of expectations of when a nuclear deal with Iran would be signed.

A U.S. State Department spokesman said on Thursday that there should be a sixth round of negotiations to revive the nuclear deal and “there’s just about every expectation there will be subsequent rounds beyond that.”

The Iranian talks come against the backdrop of a market where demand is recovering sharply in the west, but remains patchy in parts of Asia. OPEC+, which agreed to hike its output in July this week, may need to keep adding barrels to the market in August or September to meet the recovery, according to Gazprom Neft PJSC Chief Executive Officer Alexander Dyukov.

“The market can easily absorb the incremental supply from OPEC+,” said Dominic Schnider, head of commodities and Asia Pacific foreign exchange at UBS Global Wealth Management. There’s still some risk due to the virus resurgence in Asia, but it’s unlikely to derail the global recovery, he said.

The market has firmed in a bullish structure this week. The prompt timespread for Brent was as much as 47 cents in backwardation — where near-dated prices are more expensive than later-dated ones. That compares with 9 cents at the start of last week.

Still financial flows into the oil market remain relatively depressed. Trading volumes have remained light and speculative positioning in oil is relatively low, which could pave the way for higher prices in the coming months, Citigroup analysts including Francesco Martoccia wrote in a report.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

(305) 707 0888