Oil resumed gains in Asian trading with the market turning its focus back to the robust outlook after a blip caused by a stronger dollar.
Futures in New York rose toward $66 a barrel after slipping Monday for the first time in four days. A rising currency wiped out solid gains following an attack on a major Saudi Arabian export crude terminal. The assault appears to have had no impact on shipments, but it’s the latest in a series of incidents in the region amid a rapidly tightening market and improving demand.
US refineries are resuming operations after the unprecedented cold blast last month and should start consuming more crude, while gasoline demand in California -- the biggest American state -- is picking up.
Oil has rallied this year amid output cuts from Saudi Arabia and OPEC , and an improving demand outlook with the rollout of Covid-19 vaccines. Prompt timespreads have firmed in a bullish backwardation structure, helping to unwind bloated inventories built up during the coronavirus pandemic, while investment banks continue to raise their crude price forecasts.
“There’s a number of bullish signals on both the supply and demand side,” said Will Yun, a senior commodities analyst at VI Investment Corp. in Seoul. “However, upward momentum will be volatile and bumpy.”
US gasoline and distillate stockpiles -- a category that includes diesel --- declined last week, according to the median estimate in a Bloomberg survey before government data on Wednesday. Crude inventories, however, expanded for a third week, the poll shows.
{{/usCountry}}US gasoline and distillate stockpiles -- a category that includes diesel --- declined last week, according to the median estimate in a Bloomberg survey before government data on Wednesday. Crude inventories, however, expanded for a third week, the poll shows.
{{/usCountry}}“It looks like some bargain-hunting buying today, but I wouldn’t rule out some more pullback,” said Vandana Hari, the founder of Vanda Insights in Singapore. “A settlement above $69 for Brent, even after the surprising OPEC decision, seemed like an over-reaction.”