Strong Chinese Data, Demand Growth Lift Oil Market

By Adedapo Adesanya

The oil market witnessed growth on Tuesday as a string of positive news eased the recent pressures coming from the coronavirus pandemic.

At the market yesterday, the price of the Brent crude futures rose by 63 cents or 1.01 per cent to $63.91 per barrel, while the price of the West Texas Intermediate (WTI) crude futures improved by 71 cents or 1.19 per cent to trade at $60.41 per barrel.

The day’s major support was from China as data showed that exports grew at a robust pace in March in yet another boost to the nation’s economic recovery as global demand picks up amid progress in worldwide COVID-19 vaccinations.

In addition, import growth surged to the highest in four years.

Crude oil imports into China jumped 21 per cent in March from a low base of comparison a year earlier as refiners ramped up operations.

It continued gain caused by trouble caused by Yemen’s Iran-aligned Houthi movement which fired 17 drones and two ballistic missiles at targets in Saudi Arabia, including Saudi oil facilities.

The rise in geopolitical tension only has a notable bullish impact on oil prices if it is coupled with actual physical supply disruption but this was not the case.

Positive oil demand forecast also helped the market on Tuesday as the Organisation of the Petroleum Exporting Countries (OPEC) in its monthly report raised its forecast for 2021 oil demand growth by 70,000 barrels per day from its previous forecast of 5.95 million barrels per day or 6.6 per cent.

Also supporting prices ahead of weekly data, US crude oil stockpiles were expected to have fallen last week for a third straight week. This will be confirmed by the Energy Information Administration (EIA), the statistical arm of the US Department of Energy, on Wednesday.

However, the market will be studying the latest development following pauses on the Johnson & Johnson vaccine which could delay economic recovery and limit oil demand growth.

The US Center for Disease Control and Prevention and the US Food and Drug Administration recommended that the United States pause the use of J&J’s COVID-19 vaccine over six reported US cases of a “rare and severe” type of blood clot.

The six reported cases were among more than 6.8 million doses of the Johnson & Johnson vaccine administered in the United States.

The company has now decided to hold its rollout in Europe, a region that is already behind in vaccination plans.