Business News: Oil prolongs gains as demand optimism offsets viral outbreak..
Oil extended gains after closing six-week highs as signs of strengthening demand in key markets offset concerns that a Covid-19 recovery in some countries, notably India, will hold back consumption in the near future. term.
Futures in New York traded above $ 64 a barrel after climbing more than 3% in the previous two sessions. The US petroleum product demand indicator rose last week to a two-month high, while spirits stocks – a category that includes diesel – have fallen the most since early March. Fuel demand could receive another boost as China takes a long vacation on Saturday, with mobility expected to soar to a record high.
The market recovery is going through the big oil companies. Royal Dutch Shell Plc’s profit grew more than expected in the first quarter, while Total SE also made a good start to the year. Some US producers are also restoring dividends as they recover from the collapse caused by the pandemic.
There was a chorus of bullish rumors about the outlook for crude this week, including a forecast from Goldman Sachs Group Inc. says oil demand will jump record over the next six months as vaccination rates accelerate. OPEC + also raised its growth estimates this year, but the alliance warned that a worsening of the virus situation in India, Japan and Brazil could derail the recovery.
India was hit particularly hard by a second wave that hit fuel consumption, prompting some refineries to consider increasing exports in an effort to avoid deep cuts in crude oil processing. Rystad Energy has reduced its demand estimates for the nation and expects a surplus of 1.4 million barrels per day in global inventories next month due to the impact.
“The Covid-19 pandemic continues, but the economic recovery and oil demand is continuing, driven by the United States and mainland China,” said Victor Shum, vice president of energy consulting for IHS Markit. “The pent-up travel demand will fuel gains in Europe and North America, assuming the pandemic is under better control in the coming months.”
Short-term risks to the demand outlook are starting to manifest in market health indicators. On Thursday, Dubai’s Middle East benchmark structure changed slightly in contango, an indication that the market squeeze could ease. The fast times for Brent have also slipped.
Total oil inventories in the United States, meanwhile, fell for the second time in the three weeks through April 23 and are close to their lowest level since March 2020, according to an Energy Information Administration report on Wednesday. Crude oil inventories rose, while gasoline supplies rose a fourth week.