By Adedapo Adesanya
The Brent crude moved closer to $69 per barrel on Tuesday after it appreciated by $1.37 or 2.03 per cent to trade at $68.93 per barrel.
This was largely driven by positive news coming from the United States and Europe, outweighing concerns about rising COVID-19 cases in India.
The market continued to believe that the economic and oil demand rebound in the United States and Europe will suppress the high COVID numbers in India and Brazil and this sentiment pushed the price of the West Texas Intermediate (WTI) crude futures higher by $1.26 or 1.95 per cent yesterday to $65.75 per barrel.
In the United States, several states began lifting or announced plans to lift or ease lockdown restrictions. The average number of new cases in the US fell below 50,000 a day for the first time since October and airport data indicated that many have started travelling again, raising prospects for demand.
New York, New Jersey and Connecticut are some of the states in the largest oil-consuming nation that will remove the majority of the capacity restrictions for restaurants and offices. They also have plans to increase the limit on outdoor social gatherings in a significant easing of restrictions on the region’s businesses, venues, and gatherings.
The European Commission on Monday proposed welcoming fully COVID-19-vaccinated travellers and tourists from countries with “a good epidemiological situation.”
This bullish news helped the market overlook the coronavirus condition in India and other parts of the world as traders held onto signals that were favourable to the market.
The improving situation in the US and Europe stands in contrast to India, the world’s third-largest oil importer, where a deadly surge in COVID cases has gripped the country hard.
India crossed 20 million reported cases of Covid-19 on Tuesday as it recorded 357,229 new cases within 24 hours, bringing the total to 20.28 million.
India’s first cases were detected in late January last year and the country’s total did not cross 10 million infections until December but it has added 10 million more cases under five months, mostly in April. Hospitals in the country remain overwhelmed by cases and lacking in supplies including oxygen.
Prices were also supported by a weaker US Dollar which fell after Monday data showed that US manufacturing activity grew in April at a slower pace than expected. The lower dollar makes oil more attractive to buyers holding other currencies.
Traders also looked ahead to a weekly update on US petroleum supplies from the Energy Information Administration due out Wednesday.