Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Crude Oil Edges Higher on Signs of Economic Recovery

Published 04/15/2021, 10:12 AM
Updated 04/15/2021, 10:13 AM
© Reuters.

© Reuters.

By Peter Nurse   

Investing.com -- Crude oil prices edged higher Thursday, trading near one-month highs on increasing optimism for demand growth as the global economy recovers.

By 10:10 AM ET (1510 GMT), U.S. crude futures traded 0.1% higher at $63.19 a barrel, having risen 4.9% in the previous session, while the international benchmark Brent contract rose 0.1% to $66.65, after gaining 4.6% on Wednesday and closing at the highest level since March 17. 

U.S. Gasoline RBOB Futures were down 0.1% at $2.0345 a gallon.

The crude market received a boost late Wednesday with the release of Energy Information Administration data showing U.S. crude inventories fell 5.9 million barrels last week, more than double the expectations for a 2.9 million-barrel decline, and also larger than the 3.6 million barrels draw the American Petroleum Institute reported on Tuesday. 

Helping the view that the economic recovery in the U.S. was in full flight were the latest economic data Thursday, as retail sales rebounded sharply in March, climbing 9.8% on the month, while initial claims for state unemployment benefits totaled 576,000 last week, a substantial drop from 769,000 in the prior week.    

U.S. GDP growth is expected to top 7.0% this year, which would be the fastest since 1984, after a 3.5% contraction last year, the worst performance in 74 years.

It was this growth expectation, along with that of China, the second biggest economy in the world, that prompted both the Organization of Petroleum Exporting Countries and the International Energy Agency to raise their global crude demand forecasts for this year earlier this week.

“This should not be a problem for the market, given that OPEC+ still has a significant amount of spare capacity, even after taking into account the 2.1MMbbls/d of supply increases we will see from them between May and the end of July,” said ING analysts, in a note.

That said, the wildcard is Iran, which is seeking to revive a 2015 nuclear deal and have U.S. sanctions removed to lift crude exports.

Iran and global powers resumed talks on Thursday to rescue the deal which sought to make it harder for Iran to develop an atomic bomb in return for lifting sanctions. The success of these talks remains very much in the balance, particularly after Tehran on Tuesday announced its decision to enrich uranium at 60% purity, a big step closer to the 90% that is weapons-grade material.

The other issue is how U.S. shale responds to the recent rise in oil prices, with the temptation growing for producers to ramp up output.

The Energy Information Administration sees U.S. oil production averaging 11.9 million barrels a day in 2022, up about 1 million barrels, from the average this quarter.

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.