Oil holds near $67 as demand hopes balance India concern

PUBLISHED: Mon, 03 May 2021 12:04:47 GMT
Alex Lawler
Key Points
  • Surge in coronavirus cases hits India’s April fuel demand
  • OPEC boosts output in April, OPEC+ increase takes effect in May
  • Iran nuclear talks in focus

LONDON, May 3 (Reuters) – Oil held close to $67 a barrel on Monday as optimism over a strong demand rebound in countries including the United States and China balanced concern about a surge in India’s coronavirus cases and higher OPEC+ oil supply.

India on Monday reported more than 300,000 new coronavirus cases for a 12th straight day. The new wave of the virus has already led to a drop in fuel sales in the world’s third-largest consumer in April.

Brent crude rose 10 cents, or 0.2%, to $66.86 a barrel by 0920 GMT. U.S. West Texas Intermediate gained 25 cents, or 0.4%, to $63.83.

“There is no doubt that India plays a major role when we talk about oil demand,” said Avatrade analyst Naeem Aslam. “As for the rest of the world, such as China, Europe, the Middle East and the U.S., the coronavirus vaccination process continues to roll on and we see tremendous progress.”

The U.S. and China are the world’s top two oil consumers. As of Sunday morning, the United States had administered 245,591,469 vaccine doses. China had given 275.34 million doses as of Sunday.

Brent has rallied almost 30% this year, recovering from last year’s historic lows thanks to record supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+.

“The technical picture continues to suggest that oil’s price recovery remains intact,” said Jeffrey Halley, analyst at brokerage OANDA.

Sign Up for Our Newsletter Daily Update

Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.

Higher supply limited oil’s gains, however. OPEC+ decided last week to stick to a plan to boost supply slightly from May 1 and OPEC’s production climbed in April, led by a boost from Iran, a Reuters survey found.

In another development that could allow a further boost in Iranian supply, Tehran and world powers are holding talks to revive the 2015 nuclear deal.

(Additional reporting by Florence Tan Editing by David Goodman)