By Adedapo Adesanya
Oil prices returned to the bullish zone on Thursday, boosted by a weak dollar and bullish signals from Chinese import data, outweighing pressures from renewed worries about global oil demand.
Consequently, the Brent crude rose by 26 cents or 0.48 per cent to sell at $56.32 per barrel, while the US West Texas Intermediate (WTI) jumped by 70 cents or 1.32 per cent to trade at $53.63 per barrel.
The day’s positive outcome came as the US Dollar index slumped to session lows after the country’s Federal Reserve made an unfavourable comment about interest rates. A weaker greenback makes dollar-denominated oil cheaper for holders of foreign currencies.
The market was also buoyed by positive data out of the largest importer, China as the country’s total crude oil imports rose 7.3 per cent in 2020, with record arrivals in the second and third quarters as refineries expanded operations and low prices encouraged buying.
However, despite this oil demand still faces a serious threat as lockdowns in Europe and China continued.
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months while China reported its biggest daily jump in new COVID-19 cases in more than 10 months.
Global oil demand is set to rise by 5.9 million barrels per day in 2021 from an estimated average demand of 90 million barrels per day in 2020, according to the Organisation of the Petroleum Exporting Countries (OPEC) on Thursday, leaving its 2021 demand growth forecast unchanged from last month but warned that the pandemic still has a large effect on the market’s direction.
The cartel noted that developed economies will see oil demand rise by 2.6 million barrels per day this year, driven by North America, while emerging markets—led by China and India—will see oil demand increase by 3.3 million barrels per day, according to OPEC’s Monthly Oil Market Report (MOMR).
In total, world oil demand is expected to average 95.9 million barrels per day in 2021—still nearly 5 million barrels per day below the pre-crisis levels from 2019.
The market will be looking at the US as President-elect Joe Biden is set to unveil a coronavirus response plan that includes boosting the rate of vaccinations and helping counter the economic effects of the pandemic.
He has already set a goal of administering 100 million vaccine shots in the first 100 days after he takes office on January 20, and his plan is expected to include funding to expand the vaccination campaign.
Also, his plan is also expected to include a new round of direct payments to US households. A previous coronavirus relief bill was delayed last month amid disagreements about how much the size of stimulus payment should be.
The impeachment of President Donald Trump on Wednesday by the House of Representatives did not sway the market. The lower chamber accused Mr Trump of encouraging violence with his claims of election fraud and he now faces trial in the upper chamber, the Senate, but not before he leaves office next Wednesday.
Dipo Olowookere