Americas News
Oil Prices Remain Steady As Long-Lasting Demand Recovery Anticipated
Even though oil prices on Monday dipped due to falling China crude imports in May, Brent still settled above the $70 threshold, as expectation of demand recovery remained high.
Brent settled at $71.49 per barrel, falling 40 cents after hitting $72.27, its highest since May 2019; West Texas Intermediate settled at $69.23 per barrel after touching $70 for the first time since October 2018.
Jim Ritterbusch, president of Ritterbusch and Associates, said profit-taking was also behind Monday's trading behaviour, and he added that "Regardless, fresh highs suggest sustainability of this bull move with some higher values likely lying ahead."
Better still, the chief concern of crude analysts of late - rising Covid rates in India - has been replaced by declining infection rates, causing Jeffrey Halley, analyst at OANDA, to state, "With some improvement in the pandemic situation in India and the recovery in the U.S., China and Europe remaining on track, oil should remain a buy on dips."
John Kemp, commodities analyst at Reuters, noted that fund managers are also "Responding to signs of continued output restraint, especially from the U.S. shale sector, which is expected to lead to a further reduction in inventories over the second half of the year."
Kemp added that the spread between bullish long and bearish short positions is only moderately stretched, "confirming modest confidence in further price increases and scope for further accumulation."
Meanwhile, Mohammad Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), on Monday told the Nigeria International Petroleum Summit that oil stocks in developed world nations fell by 6.9 million barrels in April, 160 million barrels lower than the same time one year ago.
He said, "We expect to see further drawdowns in the months ahead."
For his part, Bernard Looney, CEO of BP Plc, expects the global crude demand recovery to last for some time.
He told media on Monday, "There is a lot of evidence that suggests that demand will be strong, and the shale seems to be remaining disciplined; I think that the situation we're in at the moment could last like this for a while."
Looney added, "I believe in vaccines and vaccines are working, we just need to get them to more places."
