Oil advanced for a third day after an industry report pointed to another decline in U.S. crude stockpiles that followed an upbeat assessment of the global demand outlook from OPEC.
Futures in New York rose 1.4 percent and is heading for the longest run of gains in over a month. The American Petroleum Institute reported crude inventories fell by 3.61 million barrels last week, according to people familiar, which will be a third straight draw if confirmed by government data Wednesday. OPEC boosted its consumption forecast for 2021 and predicted the recovery will continue.
Oil’s sizzling start to the year faltered in mid-March as some regions saw a resurgence in Covid-19 cases, raising concerns about near-term fuel demand. The Organization of Petroleum Exporting Countries said in its monthly report Tuesday that rising consumption should help to trim stockpiles even as OPEC+ readies to return more barrels to the market from May.
The coronavirus, however, is clouding the outlook for demand with some countries renewing restrictions and lockdowns to curb its spread, highlighted by normally bustling streets in India left deserted. The pause in the rollout of Johnson & Johnson’s Covid-19 vaccine in Europe after concerns about blood clots also marks another setback for the global inoculation drive.
“Oil is trying to build momentum for another test to the upside,” said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific. “OPEC’s upward demand forecast revision is helping, though it may be slightly optimistic. China’s industrial output data on Friday is going to be the next big inflection point.”
The prompt timespread for Brent was 39 cents a barrel in backwardation – where near-dated contracts are more expensive than later-dated ones. That compares with 35 cents a week earlier.
The International Energy Agency is scheduled to release its monthly report later Wednesday, providing another snapshot on the outlook for demand and supply. March industrial production data due Friday from China, which has helped the market rebound from the depths of the pandemic, is expected to show a 26.5 percent gain from a year earlier.
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