Oil prices declined on Friday as investors considered mounting supplies from major producers and the impact on fuel demand from the Covid crisis.

Brent crude futures for June moved down 12 cents, or 0.2%, to $63.08 a barrel, Reuters reports, while U.S. West Texas Intermediate (WTI) crude for May stood at $59.59 a barrel, down 1 cent.

Both contracts are set for a 2%-3% decline this week as OPEC+ agreed to steadily hike supplies by 2 million barrels per day between May and July.

According to a number of analysts, global oil inventories will continue to decline as demand for fuel accelerates in the second half of 2021 as the global economic recovery progresses.

Energy Aspects analyst Virendra Chauhan commented: “A lot of destocking is going on so we are well into the rebalancing process.”

Chauhan went on to say that before prices rally, physical markets will still need to pick up.

However, concerns remain regarding fresh lockdowns in certain parts of the world to curb a new wave of coronavirus cases, coupled with sluggish vaccine rollouts, that could impact oil demand.

Chief global markets strategist at Axi, Stephen Innes stated oil prices are forecast to trade between $60 - $70 as investors take these factors into account.

Earlier this week, talks were held between major global powers and Iran on reviving their nuclear deal from 2015, which could lead to the U.S. lifting sanctions on Iranian oil exports in the second half of 2021.

“If a fulsome framework can be crafted in the coming weeks, significant quantities of Iranian oil will likely hit the market in H2 2021,” said RBC Capital analyst Helima Croft.