Oil prices are set to close the week with notable gains as the market got a boost from positivity over the speed of the oil demand’s recovery.
Rystad Energy’s Head of Oil Markets, Bjornar Tonhaugen, has commented on this week's developments:
"This has been a very good week for oil prices, as the market could find bullish support on positive demand forecasts for the second part of the year and on signs that the US and China are at a good path for economic recovery.
The pandemic may still be causing concern in several of the world’s corners, such as Europe and India, but the downside has already mostly been priced in.
Prices could possibly be even higher if not for some vaccination campaign obstacles that have been causing disruptions in inoculating the global population.
Nevertheless, the scale is tilting towards price gains this week and rightly so as demand is about to tick up in the second part of the year.
Looking at China, GDP growth headlines and a continuation of a supportive macro picture are benefiting oil prices.
The Chinese record strong growth, bolstering sentiment about continued demand growth for oil and other commodities.
Robust Chinese economic outlook and the US fiscal stimulus, which will benefit demand for Chinese goods, combine well for oil demand growth, cementing the market’s expectations for the recovery ahead.
On the downside, Indian Covid-19 cases and slowing retail sales of oil products are worrisome and devastating, but the impact on the global market is so far limited.
Developments in India and its oil demand are not expected to weigh too heavily on OPEC+ supply policy setting, even though the alliance will definitely feel a weaker demand outlook from Indian refiners that consume 5 million bpd of crude oil currently.
We for now expect a slight drop in Indian products demand of less than 200 000 bpd m/m in April, but this can grow larger.
However, the demand growth from the rest-of-World in the coming two-three months far outweighs the drop in Indian demand and the market seems to agree for now.
Looking ahead, the market still awaits news from Vienna, firstly from the Iranian nuclear talks with P5+1, and later in the month on April 28 from OPEC+ in case of any changes to its 3-month forward-guided supply targets."
Read the article online at: https://www.oilfieldtechnology.com/special-reports/16042021/oil-closes-the-week-with-gains-on-positive-demand-outlook/