Oil holds drop near $62 with virus flare-up looming over market
Oil was steady in early Asian trading with a Covid-19 flare-up in India and other nations dragging on the near-term demand outlook, even as OPEC+ projected a strong global recovery this year.
Futures in New York traded near $62 a barrel after slipping 0.4% on Monday. An OPEC+ technical committee raised its forecast for demand growth in 2021, but cautioned that a resurgent virus in India, Japan and Brazil could derail the oil demand recovery. The second Indian wave has been particularly deadly as it overwhelms the health-care system and cripples fuel consumption.
Indian Oil Corp., the country’s biggest refiner, is looking to offload gasoline into the spot market in a rare sale, while other processors are postponing planned maintenance at some plants as workers either flee or fall ill.
The deteriorating outlook in some countries may pose a challenge to OPEC+ when it meets for a monthly ministerial meeting on Wednesday to discuss its production policy, although the group has already agreed to start adding more supply to the market from May. OPEC Secretary-General Mohammad Barkindo said Monday that there are “positive signals” in the global economy, but also pointed to factors in the oil market that require ongoing vigilance.
The prompt timespread for Brent was 62 cents in backwardation -- a bullish market structure were near-dated contracts are more expensive than later-dated ones -- on Monday. That compares with 40 cents at the start of April.
The OPEC+ committee of technical experts forecast that oil consumption will rebound by 6 million barrels a day this year from last, according to delegates who attended the panel on Monday. Most of the fuel inventories glut built up during the pandemic will have cleared by the end of this quarter, they said.