Oil Edges Higher On China Data, But Johnson & Johnson Halt Caps Gains

Still, indications still point to a "tremendous" demand recovery soon: File Image/Pixabay

Strong import data from China resulted in another session of price gains for crude on Tuesday, but hypersensitive traders capped the gains with concerns that the highly-criticized pause on the Johnson & Johnson vaccine could delay the end of the Covid pandemic and, consequently, economic recovery.

Crude imports into China jumped 21 percent in March from a low base a year earlier, as refiners ramped up operations; also, the Organization of the Petroleum Exporting Countries (OPEC) in its monthly report raised its forecast for 2021 oil demand growth by 70,000 barrels per day (bpd) from its previous forecast to 5.95 million bpd, or 6.6 percent, on the assumption the pandemic will be largely contained in the second half of the year.

The report stated, “The global economic recovery continues, significantly supported by unprecedented monetary and fiscal stimulus; the recovery is very much leaning towards the second half of 2021.”

More upbeat news on Tuesday was provided by a Reuters poll that anticipated U.S. crude stockpiles to have fallen last week for a third straight week.

Still, Johnson & Johnson stating it would delay the rollout of its Covid vaccine in Europe after extremely rare blood clots were discovered in six out of millions of recipients dampened trading enthusiasm; Brent settled up 39 cents at $63.67 per barrel, while West Texas Intermediate gained 48 cents to settle at $60.18 per barrel.

Phil Flynn, senior market analyst at Price Futures Group Inc., said, “We’ve been trading in a range and need clear demand data and direction on U.S. inventories to break out of this trough.”

One source of data that would presumably please Flynn comes from New York City, whose toll bridges and tunnels are reportedly on pace for the busiest April in at least seven years; at the same time, inflation data showed the biggest increase since 2012 as signs of an economic rebound grow.

Ignoring media scare headlines that increasingly govern trading decisions, Edward Moya, senior market analyst at Oanda Corp, stated, “There’s going to be tremendous pent-up demand for crude; there are some areas that are seeing cases trend higher, but the restrictions are going to be short-lived as vaccines get distributed.”