Oil was steady near a six-week high as signs of strengthening demand in key markets offset concerns a Covid-19 resurgence in some countries, especially India, will damp fuel consumption in the near term.
Futures in New York traded near $64 a barrel after climbing more than 3% over the previous two sessions. A gauge of demand for U.S. petroleum products rose last week to the highest in more than two months, while distillate inventories — a category that includes diesel — dropped the most since early March. Fuel demand may get another boost as China breaks for an extended holiday on Saturday, with mobility expected to climb to a record.
There has been a chorus of bullish voices on the outlook for crude this week, including a prediction from Goldman Sachs Group Inc. that oil demand will post a record jump over the next six months as vaccination rates accelerate. OPEC+ also raised its estimates for growth this year, but the alliance cautioned a worsening virus situation in India, Japan and Brazil could derail the recovery.
The short-term risks to the demand outlook are starting to show up in gauges of market health. The structure of the Middle Eastern Dubai benchmark slid on Wednesday to a shallow backwardation, an indication that market tightness may be easing. The prompt timespread for Brent has also slipped. Rystad Energy, meanwhile, cut its demand estimates for India and forecast a 1.4 million barrel-a-day surplus in global inventories next month due to the virus impact.
– Bloomberg