An OPEC+ committee decided this week to move forward with a planned gradual crude production increase, anticipating a strong demand rebound this year, even as coronavirus cases rise in countries such as India.
In the U.S., where a demand recovery is seen outpacing much of the world, President Joe Biden said that he intends to send new vaccines to India.
The market is “in a position now where the optimism is there, but it appears to be heavily priced in,” said Edward Moya, senior market analyst at Oanda Corp.
benchmark crude futures are up more than 6 per cent so far this month amid signs of a consumption recovery in some parts of the world.
But at the same time, West African crude exports to Asia are poised to drop to their lowest since October as shipments to India slump.
“You’re seeing incredibly strong demand in America and China,” said BP CEO Bernard Looney in a Bloomberg Television interview.
Brent’s underlying market structure softened, with the premium of the nearest contract narrowing against the following month.
“The broad expectation in the market here is that North America is going to outperform much of the world, at least over the next quarter or so,” said Bart Melek, head of commodity strategy at TD Securities.
Optimism around a global recovery is being driven in part by a strong rebound in China — although an oil spill outside Qingdao could threaten operations at the country’s biggest crude-receiving terminal.