Oil Gains With Demand Rebound Forerunners Outshining Virus Risks - Bloomberg

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Oil advanced to the highest in a week with the OPEC+ alliance and BP Plc pointing to signs of a robust demand recovery taking shape in some parts of the world.

Futures in New York rose as much as 1.5% on Tuesday. An OPEC+ committee decided this week to move forward with a planned gradual output increase, anticipating a strong demand rebound this year, even as coronavirus cases rise in countries such as India. Meanwhile, BP Plc Chief Executive Officer Bernard Looney said China’s oil demand is above pre-pandemic levels. In the U.S., ample freight demand has spurred a trucking boom, while road use there and in the U.K. continues to recover.

“The summer driving season around the corner, among other things, promises strong enough demand,” to keep prices supported, said Bob Yawger, head of the futures division at Mizuho Securities. The market “needs a spark to send it to the next level, with India serving as resistance to that happening.”

U.S. benchmark crude futures are up more than 5% so far this month amid signs of a consumption recovery in some parts of the world. Russian Deputy Prime Minister Alexander Novak said Tuesday that there is optimism in the global oil market and global mobility is increasing. Meanwhile, shipping giant A.P. Moller-Maersk A/S raised its earnings guidance citing surging demand for its services, underscoring a boom in global trade.

“You’re seeing incredibly strong demand in America and China,” said BP CEO Bernard Looney in a Bloomberg Television interview. “America is almost back to where it was. The vaccines are going to kick in now in Europe. Then of course the question is what happens in the rest of the world.”

Prices
West Texas Intermediate for June rose 42 cents to $62.33 a barrel at 10:28 a.m. in New York Brent for June settlement gained 32 cents to $65.97 a barrel on the ICE Futures Europe exchange.

The recovery is being driven in part by a strong rebound in China -- although an oil spill outside Quingdao could threaten operations at the country’s biggest crude-receiving terminal -- and there are some positive signs emerging in the U.S. and parts of Europe. South Korea’s economy recovered at a stronger pace than expected last quarter, as investment picked up with export growth.

In the U.S., crude inventories are expected to have fallen last week, according to a Bloomberg survey. The industry-funded American Petroleum Institute will report supply figures later Tuesday ahead of the U.S. government’s weekly storage data on Wednesday.

Other oil-market news:

The Trans Mountain oil pipeline will halt some work along its expansion route after inspectors discovered nests of Anna’s hummingbirds in an area near Burnaby, B.C. Saudi Arabia said it destroyed a bomb-laden boat in the Red Sea near the refinery hub of Yanbu Tuesday Chesapeake Energy Corp. Chief Executive Officer Doug Lawler is exiting less than three months after the oil and gas company, a one-time icon of the U.S. shale boom, emerged from bankruptcy.

— With assistance by Alex Longley, and Jack Wittels

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