Oil prices rose about 1% on Tuesday on strong Chinese import data, but the rally was capped by concerns that pauses on the Johnson & Johnson vaccine could delay economic recovery and limit oil demand growth. Also OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market.
Brent crude oil futures were up 69 cents, or 1%, at $63.97 a barrel, while U.S. crude oil futures gained 70 cents, or 1.2%, to $60.39 a barrel. Both contracts have recorded changes of less than 1% for four straight sessions. “We’ve been trading in a range, and need clear demand data and direction on U.S. inventories to break out of this trough,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. China’s exports grew at a robust pace in March in yet another boost to the nation’s economic recovery, as global demand picked up amid progress in COVID-19 vaccinations. Import growth surged to the highest in four years. Crude oil imports into China jumped 21% in March from a low base a year earlier as refiners ramped up operations. The Organisation of the Petroleum Exporting Countries in its monthly report on Tuesday raised its forecast for 2021 oil demand growth by 70,000 barrels per day from its previous forecast to 5.95 million bpd, or 6.6%.
Also supporting prices ahead of weak data, U.S. crude oil stockpiles were expected to have fallen last week for a third straight week, while distillate and gasoline inventories likely grew, according to analysts in a Reuters poll. Still, U.S. oil output from seven major shale formations is expected to rise for a third straight month, the U.S. Energy Information Administration said on Monday. The slow rate of vaccinations in Europe and anticipation of additional supply of oil from Iran in the coming months capped price gains. Johnson & Johnson said it would delay the rollout of its COVID-19 vaccine in Europe and was reviewing cases of extremely rare blood clots in people after U.S. federal health agencies recommended pausing the use of the vaccine as six women under 50 developed rare blood clots after receiving the shot.
Yemen’s Iran-aligned Houthi movement said on Monday it had fired 17 drones and two ballistic missiles at targets in Saudi Arabia, including Saudi Aramco facilities in Jubail and Jeddah.
Meanwhile, Tehran has said an explosion on Sunday at its key nuclear site was an act of sabotage by arch-foe Israel and vowed revenge. “The rise in geopolitical tension will only have a notable bullish impact on oil prices if it is coupled with actual physical supply disruption,” PVM analysts said in a note.
Meanwhile OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market. Demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6%, the Organisation of the Petroleum Exporting Countries forecast in its monthly report. That is up 70,000 bpd from last month. “As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programmes, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report. The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns. A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts.