Crude Oil is trading near $64.91 per barrel, marginally lower from the recent high of $66.75 per barrel registered on May 5. Immediate demand concern in India and Japan is likely to keep a cap on rising oil prices.
However, prices are still higher from last month’s low of $57.63 per barrel on increasing global manufacturing activity in the first few months of 2021. We expect crude oil demand loss in India and Japan which is likely to get compensated from easing lockdown in the US and Eurozone.
As per an NYT report yesterday, the number of vaccinations administered against the coronavirus has reached more than 1.21 billion globally. Still rising coronavirus cases globally are a major cause of concern. The overall global Covid-19 caseload has topped 155.6 million, while the deaths have surged to more than 3.25 million, according to Johns Hopkins University.
Rising Covid-19 cases in India are affecting demand, gasoline sales in India for the month of April fell to 2.14 MMT, the lowest in 8 months.
On the economic data front, US weekly initial unemployment claims fell -92,000 to a 13-1/2 month low of 498,000, against expectations of 538,000. Also, Eurozone March retail sales rose +2.7% m/m, against expectations of +1.6% m/m. In addition, German March factory orders rose +3.0% m/m, against expectations of +1.5% m/m and the biggest increase in 5 months. Finally, Japan April vehicle sales rose +22.2% y/y, the biggest increase in 6 months.
As per the weekly EIA report, US crude oil inventories as of Apr. 30 were -1.7% below the seasonal 5-year average, gasoline inventories were -1.9% below the 5-year average, and distillate inventories were -2.5% below the 5-year average. US crude oil production in the week ended Apr. 30 was unchanged w/w at 10.9 million BPD and was down by -2.2 million BPD (-16.8%) from the Feb-2020 record-high of 13.1 million BPD.
Crude oil prices are likely to trade positive while above the key support level of 20 days EMA of $63.51 per barrel and 50 days EMA of $61.61 per barrel. It may face stiff resistance near $67.20 per barrel