Oil rose more than 1% on Monday as Chinese economic figures and U.S. vaccination rates pointed to a strong rebound in demand in the world’s two largest economies.
Investors remain wary, however, over record-breaking infection rates in India, the third-largest fuel importer worldwide, along with higher OPEC+ oil supply.
Brent crude rose 80 cents, or 1.2%, to settle at $67.56 a barrel. U.S. West Texas Intermediate rose 91 cents, or 1.4%, to settle at $64.49 a barrel.
The United States and China, the world’s top two oil consumers, are expected to drive a recovery in demand from the coronavirus pandemic.
“Even as COVID-19 cases hit record levels this week, oil prices have moved higher on growing vaccination numbers in developed markets,” a BofA Global Research report said. “Recent data points to the high effectiveness of vaccines at preventing infections and fatalities.”
About a third of U.S. residents have been fully vaccinated, Reuters’ coronavirus tracker showed.
Meanwhile, Chinese crude imports averaged a seasonal record in February and March from increased car sales, a recovery in local travel and a strong industrial backdrop, BofA Global Research said.
Still, parts of the world such as India are seeing rising coronavirus cases. India on Monday reported more than 300,000 new coronavirus cases for a 12th straight day. The new wave of the virus has already led to a drop in fuel sales in April.
“India jitters are currently stopping oil prices from rising further,” said Rystad Energy analyst Louise Dickson.
Brent has rallied almost 30% this year, recovering from last year’s historic lows thanks to record supply cuts by the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+.
However, OPEC+ decided last week to stick to a plan to boost supply slightly from May 1 and OPEC’s production climbed in April, led by a boost from Iran, a Reuters survey found.
Tehran and world powers are holding talks to revive the 2015 nuclear deal that could add to global oil supplies should an agreement be reached. Iran’s chief nuclear negotiator on Saturday said that Tehran expects U.S. sanctions on oil, banks and most individuals and institutions to be lifted.
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