(S&P Global Platts) Crude oil futures were higher in mid-morning trade in Asia April 14, despite a pause in the Johnson & Johnson vaccine rollout and mixed data from the American Petroleum Institute, as the market remained buoyed by OPEC raising its 2021 oil demand forecast and a weaker dollar.
At 10:36 am Singapore time (0236 GMT), the ICE Brent June contract was up 42 cents/b (0.66%) from the April 13 settle at $64.09/b, while the May NYMEX light sweet crude contract was 42 cents/b (0.7%) higher at $60.60/b.
In its closely watched monthly oil market report released April 13, OPEC raised its 2021 crude oil demand forecast by 190,000 b/d from the March estimate, citing economic stimulus programs and a further easing of COVID-19 lockdown measures. OPEC now expects crude consumption to average 96.46 million b/d in 2021, up 5.95 million b/d year on year.
OPEC’s improved demand outlook comes ahead of a scheduled easing of production cuts by the OPEC+ coalition, which is due to add 350,000 b/d of crude output in May, another 350,000 b/d in June and 441,000 b/d in July. Saudi Arabia has also announced that it will unwind its additional 1 million b/d unilateral cut by 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July.
“Crude oil prices closed [April 13] at their highest level in a week after OPEC reassured the market its increase in output would be easily swept up by rising demand… it was a welcome prognosis by the market, which had been fretting about the impact the ongoing pandemic was having on demand,” ANZ analysts said in an April 14 note.
The market also received a boost from a weaker dollar, which makes US-denominated assets such as oil futures more attractive to buyers holding foreign currency. At 10:36 am, the June contract for ICE dollar futures was trading at 91.730, down 0.449% from its previous settle.
Oil markets largely shrugged off reports linking the Johnson & Johnson vaccine to blood clots similar to those experienced by a small number of Oxford-AstraZeneca vaccine recipients. The US Food and Drug Administration has recommended pausing the use of the vaccine and Johnson & Johnson has announced it will delay its rollout in Europe, according to media reports.
“WTI crude is also benefitting from a weaker dollar and mostly on continued optimism that AstraZeneca and J&J’s setback will be temporary, and that the world will still be able to get their hands on other COVID-19 vaccines,” Edward Moya, senior market analyst at OANDA, said in an April 14 note.
In inventory news, API data showed a modest 3.61-million-barrel draw in US crude inventories for the week ended April 9, although any optimism due to the modest draw was tempered by a sizable 5.57 million-barrel build in US gasoline inventories.
The market was awaiting the Energy Information Administration report due for release later April 14 for more comprehensive inventory data.
