Oil prices soared on Tuesday, backed by strong economic data from China and the US. Compensated for some of the losses from the previous session due to rising OPEC + supply and increased infections in India and parts of Europe.
Brent rose 90 cents, or 1.5%, to $63.05 a barrel by 0840 GMT. West Texas Intermediate (WTI) crude rose 98 cents, or 1.7%, to $59.63.
Both benchmarks fell around $3 on Monday.
Worldwide coronavirus-related deaths exceeded 3 million on Tuesday, with COVID-19 infections persistently challenging global vaccination efforts. The current situation remains fragile, so it wouldn’t be a surprise to see recent high price levels again anytime soon. Until there are tangible signs of falling infection rates, the violence and rush in the oil market will continue.
March data show that US service activity reached a record high, and market sentiment was revived. Sales in the Chinese service sector have also accelerate sharply in the last three months.
In addition, the UK is preparing to ease further restrictions on April 12, after the opening of businesses, including all shops, gyms, hairdressers and outdoor social areas.
New Zealand will allow Australians to visit without quarantine starting April 19.
These factors have helped dispel concerns over the agreement to restore supply by the Organization of Petroleum Exporting Countries (OPEC) and its allies last week, with 350,000 barrels a day in May, another 350,000 barrels in June, and around 400,000 barrels in July.
However, new restrictions imposed in most of Europe and rising infections in India are suppressing prices.
Also, the attention of the market is currently in indirect talks held in Vienna to revive the 2015 nuclear deal between the US and Iran.
Any recovery in Iran’s oil exports will no longer be a shock to the market and / but a full recovery is not expected until the summer of 2022.
Meanwhile, there is an escalating tension between Saudi Arabia and India. According to some sources, Indian state refineries say they plan to buy 36% less oil from Saudi Arabia in May.
