By Barani Krishnan
Investing.com - Oil prices rose 2% Tuesday, extending gains for May as crude traders focused on the U.S. economy’s continued breakaway from the COVID situation in India and rest of the world.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled up $1.20, or 1.9%, at $65.69 per barrel.
London-traded Brent, the global benchmark for crude, gained $1.32, or 2%, to settle at $68.88.
Tuesday’s oil rally came on top of Monday’s 1% gain and was helped by President Joe Biden’s plan to offer businesses tax credits for assisting the government’s vaccination program for Covid.
More than 100 million people in the United States — including more than 40% of the adult population and nearly 70% of the senior population — have already been fully vaccinated against the first strain of the virus that broke out in March 2020, according to the US Centers for Disease Control and Prevention. The massive immunization drive has helped the United States lead the rest of the world in recovery from the pandemic.
Sentiment in oil was also helped by data from earlier on Tuesday showing the U.S. trade deficit at a record high of $74.4 billion in March as Americans flush with Covid-19 relief checks of $1,400 a person kept up with the demand for foreign-made goods.
“Investors are a little unsure on how to navigate the next couple of quarters of roaring US growth that is unlikely to be reciprocated by the rest of the world,” said Ed Moya, head of Americas research at online trading platform OANDA.
“The path higher for oil is clearly higher, it just needs to see that what is happening in India does not happen anywhere else,” he said, adding that crude will have difficulty breaking above March highs until the world’s third largest oil importer starts to see COVID cases declining.
India surpassed 20 million Covid cases on Tuesday as a second wave of infections continues to paralyze the world's second-most populous country. Multiple states in India will go into "complete lockdown" in the coming days.
Countries in South Asia were also taking precautions as infections rose around the region.
Globally, there have been more cases of Covid-19 reported in the last two weeks than during the first six months of the pandemic, the director-general of the World Health Organization said Monday.