Crude oil prices continued the positive move from last week’s low of $60.66 per barrel and currently holding above $64 per barrel on increased demand optimism due to positive economic data.
Goldman Sachs (NYSE:GS) has projected that global oil consumption will surge +5.2 million BPD over the next six months, and crude prices will soar to $80 a barrel. Goldman projects that overall crude demand will increase to 99 million BPD in Q1 versus 94.5 million BPD currently as the pace of vaccinations accelerates in Europe. Goldman estimates the easing of international travel curbs in May will boost global jet fuel demand by +1.5 million BPD.
On economic data front, Japan March retail sales rose +1.2% m/m, against expectations of +0.6% m/m. However. German May GfK consumer confidence unexpectedly fell from -2.7 to -8.8, against expectations of an increase to -4.2. Economic data were mixed for crude oil demand.
OPEC+ said they would proceed with plans to slowly revive crude production as global demand recovers from the pandemic and restart about 2.0 million BPD of daily output over the next three months, beginning with an increase of +600,000 BPD in May. The group also expects global stocks to reach 2.95 billion barrels in July, taking them below the 2015-2019 average. Oil production and oil inventory levels are likely to balance the oil market and likely to keep supporting oil prices.
Kuwait Oil Minister Mohammad Abdulatif al-Fares said that global demand for crude oil “improved noticeably” as a result of COVID-19 vaccine rollouts and economic stimulus in major economies.
Meanwhile, Libya's National Oil Corp (NOC) said that it is lifting force majeure at its Hariga oil port and is gradually restarting crude production there. Crude production is being restarted in Hariga after the NOC received 1 billion dinars ($224 million) from the government to maintain oil fields and pipelines. An increase in oil production may limit the gain in crude oil prices.
The rising number of Covid-19 cases in India, Japan, and Brazil are likely to keep oil prices under pressure. The overall global Covid-19 caseload has topped 149.1 million, while the deaths have surged to more than 3.14 million, according to the Johns Hopkins University. However robust vaccination drives in North America and Europe to boost oil demand.
On the Inventory front, EIA crude inventories unexpectedly rose +90,000 bbl against expectations of a -500,000 bbl draw. Also, EIA gasoline supplies unexpectedly rose +92,000 bbl against expectations of a -50,000 bbl draw. However, EIA distillate stockpiles fell by -3.34 million bbl, against expectations of -1.24 million bbl. The weekly inventory report was mixed for oil prices.
Crude oil prices are likely to trade firm on increasing demand optimism worldwide. It may trade firm while above key support level of 20 days EMA of $62.31 per barrel and 50 days EMA of $60.62 per barrel. It is likely to face stiff resistance around $66.57 per barrel and $67.69 per barrel