Oil prices gain as Covid-19-induced volatility continues

Strong economic data from China and the United States helped to lift oil prices on Tuesday, recouping some of the previous session’s losses, as coronavirus-led volatility continues to dominate.

Brent rose 80 cents, or 1.3%, to $62.95 a barrel by 1115 GMT. U.S. West Texas Intermediate (WTI) crude rose 82 cents, or 1.4%, to $59.47.

Both contracts fell by about $3 on Monday, pressured by increasing OPEC+ oil supply and rising COVID-19 infections in India and parts of Europe.

Market sentiment was buoyed as March data showed U.S. services activity hit a record high. China’s service sector has also gathered steam with the sharpest increase in sales in three months.
In addition, England is set to ease more coronavirus restrictions on April 12, with the opening of businesses including all shops, gyms, hair salons and outdoor hospitality areas.
However, new restrictions in most of Europe and rising infections in India weighed on prices.

Those factors helped to offset worries about the agreement last week by the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, to bring back 350,000 barrels per day (bpd) of supply in May, another 350,000 bpd in June and a further 400,000 bpd or so in July.

The market’s attention is now on indirect talks between the United States and Iran in Vienna to revive the 2015 nuclear deal between Tehran and world powers, which could lead to Washington lifting sanctions on Iran’s energy sector.
Goldman Sachs said any potential recovery in Iranian oil exports would not be a shock to the market and full recovery would not occur until summer 2022.

Traders also breathed a sigh of relief after a tanker faced difficulties in the south of the Suez Canal but soon continued its journey.
The Suez Canal Authority (SCA) said the issue had lasted about 10 minutes and “was fixed”.
Oil prices spiked in late March after a giant container ship blocked the canal for days.

Meanwhile, escalating tensions between Saudi Arabia and India continued. Indian state refiners plan to buy 36% less oil from Saudi Arabia in May than normal, three sources said.

Reuters/Hauwa Abu