Oil rose with traders looking for the next catalyst to shake the market out of a recent tight trading range.
Source: Bloomberg News, by Saket Sundria and Alex Longley
Futures were near US$60 a barrel in New York, a level around which they have gyrated for almost four weeks. Trade data in China signaled strong momentum in March, despite missing estimates. In the U.S., government figures showed miles traveled on highways over the Easter holiday period were the highest since March 2020, another sign of the rebound in activity in the world’s largest economy.
Pockets of higher oil consumption are emerging worldwide as vaccinations climb. But a flare-up of COVID-19 cases is leading to renewed restrictions in countries like India, where streets are emptying again as the nation tackles a new wave on infections.
The market has failed to shake off near-term demand concerns because of the resurgence of the virus and as bets on global reflation eased. Adding to the bearish outlook is the prospect for more supply from the U.S. next month, which will coincide with an uptick in OPEC+ output.
“As conviction in the reflation trade has faltered a bit, it seems some of that uncertainty has carried over into oil,” said Paul Horsnell, head of commodities research at Standard Chartered. There “doesn’t seem to be much conviction among traders, volumes are low and all a bit lethargic.”
- West Texas Intermediate added 0.5per cent to US$60 a barrel at 10:19 a.m. London time
- Brent for June settlement rose 0.7per cent to US$63.73
With crude prices struggling for momentum, a gauge of WTI volatility fell to its lowest level since February. Brent’s equivalent was at its lowest in almost a month.