Oil increased amid bullish forecasts of recovering demand
Oil prices extended gains on April 29, after gaining 1% in the previous session. The rise was supported by bullish forecasts of recovering demand. They outweighed concerns about the impact of increasing coronavirus infections in Brazil, Japan and India.
Brent boosted by 0.7% which equals 49 cents and traded at $67,76 a barrel. Meanwhile, U.S. West Texas Intermediate crude gained 0.7% or 43 cents and touched $64.29 a barrel.
This is the third consecutive session that both contracts are boosting.
The Energy Information Administration report also revealed domestic crude inventories increased by 90,000 barrels last week. This is smaller than the 4.32 million barrel rise reported by the industry-funded American Petroleum Institute. Meanwhile, the report showed that Gasoline inventories increased for a fourth straight week.
According to Tamas Varga, an analyst at PVM Oil associates, the devastating coronavirus engulfing in India, Japan, and Turkey, amongst others, is not likely to have a long-lasting impact on economic expansion.
OPEC+ expects global stocks to touch 2.95 billion barrels in July
Moreover, the Organization of the Petroleum Exporting Countries and its allies stuck to its plans this week for a gradual easing of oil production curbs from May to July.
Remarkably, OPEC+ expects global stocks to touch 2.95 billion barrels in July, taking them below the 2015-2019 average.
The Citi bank expects vaccination campaigns in North America and Europe to increase oil demand to a record high of 101.5 million barrels per day (BPD) over the northern hemisphere summer months. However, the bank announced growing coronavirus infections in Brazil and India could hit local demand if stricter lockdowns are re-imposed.
According to Howie Lee, an economist at Singapore’s OCBC bank, the outbreak in India is holding back oil’s rally.
Furthermore, oil is enjoying support from renewed interest in the broader commodities space as the greenback continues its overall downward trend and as investors look to hedge against inflation. The U.S. Federal Reserve left key interest rates near zero on Wednesday. Moreover, the Bloomberg Dollar Spot Index headed for its lowest close since late February, increasing the appeal of commodities priced in the currency.
