Oil up as fuel demand recovery outlook brightens

Oil was up Wednesday morning in Asia, inching up over prospects for stronger global economic growth as the Covid-19 vaccine rollout widens and crude oil inventories in the US, the biggest fuel consumer globally, fell.

Brent oil futures edged up 0.16% to $62.84 by 11:28 PM ET (3:28 AM GMT) and WTI futures edged up 0.15% to $59.42.

“Optimism on the global economic outlook boosted sentiment in the crude oil market,” ANZ bank analysts said in a note.

Fuel demand recovery hopes were bolstered after February’s US JOLTs job openings report, released on Tuesday, showed that vacancies rose to a two-year high of 7.367 million. The report also said that hiring also recorded its biggest gain in nine months.

The data follows China’s Caixin services Purchasing Managers Index, whose March reading was 54.3. Chinese inflation data, including the Consumer Price and Producer Price indexes, is due on Friday.

The IMF also said that global growth of 6% in 2021 could be attainable as it opened its 2021 spring meetings on Apr. 5. The figure is the strongest expansion in at least four decades, and attributable to unprecedented public spending to fight Covid-19, primarily by the US. The meetings, co-hosted with the World Bank, will continue virtually until Apr. 11.

Meanwhile, US President Joe Biden moved up the Covid-19 vaccine eligibility target for all American adults to Apr. 19, widening the vaccine rollout and further boosting fuel demand recovery hopes.

On the supply front, US crude oil supply data from the American Petroleum Institute showed a draw of 2.618 million barrels for the week ending Apr. 2. Forecasts prepared by Investing.com predicted a 1.325-million-barrel draw, while a 3.91-million-barrel build was reported during the previous week.

US oil production is also forecast to fall by 270,000 barrels per day (bpd) in 2021 to 11.04 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday. The forecast is a steeper decline than the previous monthly forecast for a drop of 160,000 bpd.

Crude oil supply data from the EIA is due later in the day.

Meanwhile, Iran held ‘constructive’ talks with world powers on Tuesday, where it agreed to form working groups to discuss potentially reviving the 2015 nuclear deal. The revival could lead to the US lifting sanctions on Iran’s energy sector, in turn increasing the global oil supply.

First published on Investing.com