Oil prices rose early on Monday, with WTI Crude topping $60 a barrel for the first time in a week after the Fed chair Jerome Powell said that the outlook on the U.S. economy had “brightened substantially.”

As of 9:32 a.m. EDT on Monday, WTI Crude prices were rising by 1.97 percent at $60.50, and Brent Crude was up 1.76 percent at $64.06.

Oil prices were supported by Powell’s assessment that the U.S. economy is set for strong growth and job creation with vaccination rollouts and fiscal stimulus. A weaker U.S. dollar also added to investors’ appetite for crude, while another claim from the Yemeni rebel group the Houthis that they had targeted oil facilities of Aramco in Saudi Arabia further supported prices.

In an interview with CBS ’60 Minutes’ published on Sunday, Fed’s chair Powell said that “What we’re seeing now is really an economy that seems to be at an inflection point. And that’s because of widespread vaccination and strong fiscal support, strong monetary policy support. We feel like we’re at a place where the economy’s about to start growing much more quickly and job creation coming in much more quickly.”

The key risk to the economy is a potential resurgence of the coronavirus, Powell warned, noting that social distancing and masks would be a “smart” thing to do as states are re-opening and easing restrictions.

“I’d say that we and a lot of private sector forecasters see strong growth and strong job creation starting right now. So really, the outlook has brightened substantially,” Powell added.

The brighter prospects for the U.S. economy outweighed at the start of the trading week concerns over oil demand in other parts of the world, with COVID cases surging in India, the world’s third-largest oil importer.

Oil prices remain “rangebound with the prospect for stronger economic growth helping to offset the impact of a resurgent coronavirus just as OPEC+ prepares to add supply,” Saxo Bank analysts said on Monday.

“Last week oil posted its worst week in three and while the demand outlook into the second half looks strong, short-term challenges are likely to keep Brent rangebound, currently between $60 and $65,” the analysts noted.

By Tsvetana Paraskova for Oilprice.com (View Full Article Here)

Last week’s surprise decision from OPEC+ to ease the production cuts by a cumulative 2 million barrels per day (bpd) by July relies on expectations of robust oil demand recovery in the second quarter. Yet, recent demand concerns suggest the alliance’s supply management policies could once again be more in the realm of guestimates.

The easing of the collective cuts by over 1 million bpd over the next three months, plus Saudi Arabia reversing gradually its extra 1 million bpd cut signal that OPEC+ expects demand to rebound strongly and justify supply increases, Reuters columnist Clyde Russell writes.

However, the unpredictability of the COVID resurgence in major economies lagging behind in vaccination programs could spoil the OPEC+ forecasts and supply management policies once again.

Last week, OPEC+ decided to gradually increase collective oil production by 350,000 bpd in each of May and June and by more than 400,000 bpd in July. Additionally, Saudi Arabia will also gradually ease its extra unilateral cut of 1 million bpd over the course of the next few months, beginning with monthly production increases of 250,000 bpd in each of May and June.

Although the initial knee-jerk reaction to the outcome of the OPEC+ meeting on Thursday was heavy selling in oil because additional supply is coming, prices finished strong that day with more than 3-percent gains as the market realized that OPEC+ expects strengthening of oil demand with its decision to put more crude on the market.

Asia’s demand for crude looks strong as gasoline demand looks robust, but demand for diesel and jet fuel is still soft, according to Reuters’ Russell.

India, the world’s third-largest oil importer, added another scare to oil demand forecasts this week, with a record-high number of new COVID cases and a lockdown in the biggest city, Mumbai.

Most analysts continue to believe that the market will be able to absorb the new barrels from OPEC+ with strengthening demand going into the summer months. Goldman Sachs, for example, is still bullish on oil and anticipates strong demand that would require OPEC+ putting another 2 million bpd on the market in the third quarter, after the around 2 million bpd that the alliance and Saudi Arabia decided to return between May and July.

By Tsvetana Paraskova for Oilprice.com (View Full Article Here)

Oil prices rose early on Tuesday along with rallies in other commodities and equities globally, following encouraging economic reports out of the United States and China and increased forecasts for the global economy this year and next.

As of 9:37 a.m. EDT on Tuesday, WTI Crude was back up above $60 a barrel, rising by 2.42 percent at $60.06, and Brent Crude was up by 2.17 percent on the day at $63.50, also helped by weakness in the U.S. dollar.

The weaker dollar and strong economic news out of the world’s top oil consumer, the United States, and the world’s top oil importer, China, helped oil prices to recover on Tuesday some of the losses from Monday.

Yesterday, crude oil prices slumped by nearly 5 percent, weighed down by record-high new COVID cases in a major oil importer and consumer, India, and continued lockdowns in large European economies such as Germany and France.

On Tuesday, stocks hit record highs in the MSCI All Country World Index, after the Institute for Supply Management said on Monday that the U.S. Services PMI for March registered 63.7 percent—an all-time high for the Services PMI. This came four days after the manufacturing report from the same institute showed the highest monthly growth rate for factories since 1983.

In China, the services sector expanded at the fastest pace in three months in March as optimism among firms jumped to a 10-year peak, the Caixin China General Services Business Activity Index showed on Tuesday.

In addition, the International Monetary Fund (IMF) lifted its global economic growth forecast to 6 percent this year and to 4.4 percent in 2022 in its April World Economic Outlook (WEO) published today.

“The projections for 2021 and 2022 are 0.8 percentage point and 0.2 percentage point stronger than in the October 2020 WEO, reflecting additional fiscal support in a few large economies and the anticipated vaccine-powered recovery in the second half of the year,” the IMF said.

By Tsvetana Paraskova for Oilprice.com (View Full Article Here)