By Adedapo Adesanya
Crude oil prices rose on Friday on the back of hopes of a fuel demand recovery in the United States and Europe as the market swayed on signals of economic growth and lockdowns ease despite pressures from the coronavirus resurgence.
Brent crude futures closed 71 cents or 1.09 per cent higher to $66.11 per barrel, while the West Texas Intermediate (WTI) crude futures also rose 71 cents or 1.16 per cent to trade at $62.14 per barrel.
In the US, there were reports of an increase in demand for refined products such as petrol and diesel, indicating a return to pre-pandemic levels.
In Europe, President Emmanuel Macron of France said schools would reopen on Monday and that the domestic travel curbs in place since early April, restricting people to within 10 kilometres of their homes, would end on May 3.
In addition, April’s Eurozone Purchasing Manager’s Index (PMI) data came up surprisingly positive, a sign that demand is ticking up. It rose to a nine-month high of 53.7 from March’s 53.2.
However, despite the bullish performance, the week saw Brent lose 1 per cent while WTI saw a loss of 1.7 per cent.
This is because of a surge in COVID-19 cases in India and Japan. Prices for both benchmarks, however, trade more than 27 per cent higher year to date.
India, one of the world’s largest oil importers, saw more than 330,000 cases in a 24-hour period, setting a global record for a second day.
In Japan, Tokyo and other cities suffered another lockdown Friday to stem the rise in coronavirus cases.
India and Japan are the world’s third and fourth-largest oil importers respectively, after China and the US.
Several countries, including Australia, Britain, Canada, and the United Arab Emirates, have barred or cut flights from India.
Market analysts note that if demand recovers this summer, the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, might need to ramp up supply far beyond current July 2021 targets.
At a meeting in early April, the group decided to gradually raise production from May through July.
The alliance will hold its next meeting on Wednesday, April 28 but there are no expectations to change the decision reached earlier this month.
Also, the group’s leader, Saudi Arabia will start rolling back production cuts, and there’s the possibility of Iranian oil coming back to the market, further signals that may depress the market.
Modupe Gbadeyanka