Crude oil futures were trading slightly higher on Tuesday after a report from China provided further evidence that an economic rebound was taking hold in one of the biggest importers of crude and global commodities.
A monthly report from OPEC forecasting a jump in economic activity and oil demand aided by the U.S.’s $1.9 trillion COVID aid package and the rollout of vaccines also helped buttress sentiment in crude markets.
However, concerns about rollout of the COVID vaccine, including a call for an immediate pause in the rollout of the Johnson & Johnson
one-shot vaccine, has raised some concerns about how quickly the U.S. economy will bounce back from the pandemic.
“Prices may be gaining today, but there is still a plethora of short-term hesitancy over Covid-19 breakouts and vaccine progress,” wrote Louise Dickson, oil markets analyst at Rystad Energy.
The monthly report from the Organization of the Petroleum Exporting Countries said that it expects the bulk of consumption of energy products to pick up in the second half of 2021, after fresh coronavirus outbreaks resulted in fitful economic recoveries in many parts of the world.
“The year started with new waves of COVID-19 infections, necessitating renewed lockdown measures in many OECD economies. Therefore, the bulk of consumption growth is expected to take place in 2Q21 and 3Q21,” the report read.
OPEC increased its 2021 global oil demand forecast by 100,000 barrels a day and raised its forecast for global economic growth to 5.4% from 5.1%.
West Texas Intermediate crude for May delivery
was trading 58 cents, or 1%, higher at $60.27 a barrel on the New York Mercantile Exchange.
Global benchmark June Brent crude
advanced 63 cents, or 1%, at $63.90 a barrel on ICE Futures Europe.
“The main drivers are rising consumer and business confidence in the US, leading to higher consumption and investment growth rates,” according to the report. “This is then consequently forecast to lead to a positive carry-over to major US economic partners, and an ongoing strong recovery in Asian economies.”
Oil prices got an early bump after Chinese imports in U.S. dollar terms rose 38.1% in March from a year ago, exceeding the 23.3% increase analysts had forecast.
Geopolitical tensions also were helping support crude values. Oil futures finished higher on Monday, as reports that Yemen’s Iran-backed Houthi rebels attacked a Saudi oil facility lifted tensions in the oil-rich Middle East.