Strong economic data from China and the US helped oil prices soar 1% on Tuesday, recouping some of the losses from the previous session.
Brent rose 59 cents, or 1%, to settle at $62.74 a barrel. West Texas Intermediate (WTI) crude rose 68 cents, or 1.2%, to settle at $59.33 a barrel.
Prices picked up as US services activity hit a record high in March. China’s service industry has also picked up with the sharpest sales growth in the past three months.
The UK will continue to ease more of its coronavirus restrictions on April 12, which it partially eased.
The market is recovering from sharp losses on Monday, when both oil standards fell by about $ 3, due to increased OPEC + oil supplies, and increased COVID-19 infections in parts of India and Europe.
The Organization of Petroleum Exporting Countries (OPEC) and its allies agreed to increase the daily supply of 350,000 barrels in May last week, 350,000 barrels in June and 400,000 barrels in July. Some commentators believe month-to-month updates are a more accurate strategy.
Although OPEC + will significantly increase oil production in the next three months, contrary to the recommendations of most market participants and its own research team, the market now shows that this is not a problem.
The number of deaths from coronavirus worldwide exceeded 3 million on Tuesday. Vaccination efforts need to keep pace with the rate of spread of infections that are resurging globally. Success against the disease is very dependent on the speed of the vaccination process. The faster the vaccination is completed, the sooner the disease will completely disappear or become normal.
New restrictions in Europe continue to keep prices under pressure.
The current oil market’s constructive outlook is significantly based on the assumption that there will be a strong demand recovery in the second half of this year. The current risks and uncertainties of the market raise concerns about demand.
The US Energy Information Administration (EIA) said that oil production in the US is expected to decline more sharply than projected in 2021.
US and Iranian officials will begin indirect talks in Vienna on Tuesday to revive the 2015 nuclear deal between Tehran and world powers. This could lead Washington to lift sanctions on Iran’s energy sector. A recovery in Iranian oil exports will not be a shock to the market, but a full recovery is not expected until the summer of 2022.
Meanwhile, tension between Saudi Arabia and India has escalated. Indian state refineries plan to buy 36% less oil than usual from Saudi Arabia in May.
