Brent Rises to $68 over Expected Recovery in Oil Demand

By Adedapo Adesanya

Brent crude continued its steady rise on Thursday as an expected recovery in the demand for the commodity outweighed concerns about higher COVID-19 cases in Brazil and India.

Yesterday, the international benchmark futures gained $1.28 or 1.9 per cent to trade at $68.55 per barrel while the United States crude benchmark, the West Texas Intermediate (WTI) crude futures, rose by $1.09 or 1.7 per cent to sell at $64.95 per barrel.

Demand is expected to improve in the coming weeks as top economies like the US, China and the United Kingdom go into the summer season, which points out to more cars on the road and an increase in travel. This is a development the market believes will make up for India’s COVID-19 downturn.

In Europe, efforts are being made to double vaccine capacity for the next year and this was complemented as the region’s largest economy, Germany, administered a daily record of almost 1.1 million COVID vaccine doses.

In the US, New York City aims to fully reopen on July 1 after more than a year of closures and capacity restrictions facilitated by satisfactory progress in vaccinating its more than 8 million residents

The string of bullish news helped the market overlook the coronavirus condition in seriously affected parts of the world as traders held onto signals of improving demand.

If this continues, it implies that the COVID-19 nightmare ravaging India, Japan, Brazil, and Turkey, amongst others, is not expected to have a long-lasting impact on economic expansion.

Prices were also supported by a weaker US Dollar as it dropped to almost a nine-week lows following the economic policies of the Joe Biden led US administration.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, stuck to its plans this week for a gradual easing of oil production curbs from May to July.

OPEC+ expects global stocks to reach 2.95 billion barrels in July, taking them below the 2015-2019 average.

Positive quarterly results from major energy companies, including BP PLC, Total SE (TOTF.PA) and Equinor ASA also boosted the market as these companies profited from higher oil prices to report big increases in first-quarter earnings.