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Brent crude holds above $69 on increasing coronavirus recovery rate
Oil & Gas | 15 March 2021

Oil held above $69 a barrel in London after a raft of economic data from China added to indications of recovery from the Covid pandemic as reported by Bloomberg. 

Brent futures traded up 0.4% after earlier climbing 1.2%. Figures from China for the initial two months of the year showed a surge in industrial yield, underscoring the strength of its V-shaped rebound and supporting assumptions for increased energy demand. Citigroup Inc. raised its entire year Brent estimate.

China processed more than 14 million barrels per day in January and February, and refiners have kept consumption over that level each month since June. There are likewise signs that demand is picking up in different nations. The number of U.S. air passengers hit a year high on Friday, while street use is sneaking up in parts of Europe.

Crude has revitalized emphatically this year, upheld by the vaccine-aided recovery from the pandemic and OPEC’s choice to keep a firm grasp on supplies. That combination in addition to attacks on Saudi oil infrastructure assisted Brent top $71 a barrel a week ago and drawdowns from inventories are expected to proceed.

“Further price strength is entirely feasible," said Tamas Varga, an analyst at PVM Oil Associates Ltd. An increment to $80 not long from now "has now become more than just wishful thinking." 

Prices: 

  • Brent for May settlement edged up 0.4% to $69.52 a barrel on the ICE Futures Europe exchange as of 10:42 a.m. in London 
  • West Texas Intermediate for April likewise rose 0.4% to trade at $65.90

Citigroup, as PVM, likewise said Brent could spike to $80 during "aggressive" activities by the Organization of Petroleum Exporting Countries and its partners. The bank sees prices averaging $69 this year, up to $5 from its past outlook. 

There are some less positive signs for the time being, nonetheless. WTI's closest time spread flipped into a bearish contango structure flagging oversupply after crude stores in the U.S. filled as of late.

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