By Adedapo Adesanya
The crude oil market was bullish on Monday on the back of a weaker United States Dollar and disruption to the supply of the commodity in Libya, even as worries persist over rising coronavirus cases in Europe, South Asia and Latin America.
Yesterday, the price of the Brent rose by 0.45 per cent or 30 cents to sell at $67.07 per barrel, while the West Texas Intermediate (WTI) increased by 0.43 per cent or 27 cents to trade at $63.40 per barrel.
Prices reacted after the US Dollar traded at a six-week low against major currencies on Monday as a weaker Dollar makes oil cheaper for holders of other currencies.
In addition, the market was positive after it appeared that crude oil production in Libya could drop, having stabilized in recent months at just over 1.2 million barrels per day.
The North African producer could see its re-emerging supply drop in the coming days and possibly weeks after a field operator stopped pumping crude because of delays of budget allocations.
The Arabian Gulf Oil Company, a subsidiary of the National Oil Corporation (NOC), has decided to halt production because of the delays in the budget that is planned to allocate money to the oil firm to repair and maintain infrastructure and keep oil production online.
Another factor that pushed prices up on Monday was the information that Saudi Arabia’s crude oil exports fell in February to its lowest in eight months.
This information was revealed yesterday by the Joint Organisations Data Initiative (JODI) as the world’s biggest oil exporter voluntarily capped output to support oil prices.
Despite these positives, the market still has to contend with rising coronavirus cases just as new infections have surged in India, the world’s third-biggest oil importer and consumer, dampening optimism for a sustained global recovery in demand.
This has forced India’s capital, Delhi, to announce a week-long lockdown after cases spiked and overwhelmed the city’s healthcare system.
Government offices and essential services, such as hospitals, pharmacies and grocers, will be open during the lockdown, which started on Monday night.
The city had imposed a weekend curfew but reported its highest single-day spike so far on Sunday with 24,462 cases.
India has been reeling from a deadly second wave since the start of April.
More restrictions to air travel could also dampen the recovery for oil demand as Hong Kong announced the suspension of flights from India, Pakistan and the Philippines from April 20 due to imported coronavirus infections.
With the Organisation of Petroleum Exporting Countries and its allies (OPEC+) planning to start raising output in May, the markets are now focused on the double whammy of weakening demand recovery and growing supplies.
Modupe Gbadeyanka