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Oil prices rose higher on Wednesday over the prospect of stronger global economic growth amid rising COVID-19 vaccinations and a report that crude stocks in the United States, the world’s largest fuel consumer, have fallen.
But optimism about talks between the United States and Iran and a looming increase in supply by major oil producers have limited profits.
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Brent crude futures for June rose 24 cents, or 0.4%, to $ 62.98 a barrel at 0403 GMT, while US West Texas Intermediate Crude for May rose 20 cents, or 0.3%, rose to $ 59.53.
“Optimism about the global economic outlook has increased sentiment in the crude oil market,” analysts at ANZ Bank wrote in a note on Wednesday.
Prices have risen as data shows on Tuesday that jobs in the US rose to a two-year high in February as the increase increased. This follows earlier data showing improvement in the service sectors in the US and China.
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The International Monetary Fund said on Tuesday that unprecedented public spending to fight COVID-19 would boost global growth this year to 6%, a rate not seen since the 1970s.
Optimism about a wider vaccine deployment has also raised prices, with U.S. President Joe Biden raising the COVID-19 vaccination target for all U.S. adults until April 19.
U.S. crude oil stocks fell more than expected in the week ended April 2, while fuel supplies rose according to three market sources, citing the U.S. Petroleum Institute (API) ahead of government data on Wednesday.
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US oil production is expected to fall by 270,000 barrels per day (bpd) to 20.04 million bpd by 2021, the Energy Information Administration (EIA) said on Tuesday, a stronger drop than the previous monthly estimate for a decrease of 160,000 bpd.
Iran and world powers on Tuesday held what they described as ‘constructive’ talks and agreed to form working groups to revive the 2015 nuclear deal, which could lead to Washington lifting sanctions against Iran’s energy sector and increasing oil supplies.
Oil prices fell earlier this week after the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC +, agreed to gradually reduce oil production cuts from May.
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“It looks like crude prices are consolidating, as energy traders need to see exactly how OPEC + will execute their plan to increase production, and whether the EU will have virus immunity by the end of June,” said Edward Moya, senior market analyst at OANDA.
(Posted by Jessica Jaganathan; Edited by Christian Schmollinger)