NEW YORK: Oil topped US$66 a barrel as traders assessed prospects for further recovery from the pandemic and the outlook for rising global demand as the Opec+ alliance presses on with output curbs to drain inventories.
West Texas Intermediate in New York gained as much as 0.8% after easing on Friday to cap a narrow weekly loss.
The weekly US Covid-19 death toll sank to a four-month low and new infections dropped, boosting the outlook for energy consumption in the world’s largest economy. Still, there are pockets of concern in the Asia-Pacific, including a fresh outbreak in Hong Kong.
Crude has rallied strongly in the opening months of 2021, supported by the vaccine-aided recovery from the pandemic and the decision by the Organization of Petroleum Exporting Countries and its allies to keep a tight rein on supplies.
That combination — plus an uptick in attacks on Saudi oil infrastructure by Houthi rebels — helped London’s Brent crude to top US$71 a barrel last week.
Data from China later Monday will confirm roaring growth in activity in the first two months of 2021, although the figures will be skewed by comparisons from a year ago when the nation was the first in the world to go into lockdown.
The figures from Asia’s top economy will include industrial output and retail sales.
Prices:
- West Texas Intermediate for April delivery rose 0.6% to US$66.03 a barrel on the New York Mercantile Exchange at 7:39am in Singapore.
— Earlier, WTI gained to as much as $66.16. - Brent for May settlement climbed 0.6% to US$69.60 a barrel on the ICE Futures Europe exchange.
- The Bloomberg Dollar Spot Index rose for a second day.
- The Opec+ alliance is wagering its tighter-for-longer policy on supply curbs will buttress higher prices without provoking a resurgence in US shale output. On Friday, Baker Hughes Co data showed the US rig count little changed.
The gain in energy markets on Monday came despite a firmer tone in the dollar. The US currency has advanced, in part as Treasury 10-year yields topped 1.6% with the roll-out of vaccines and passage of a US fiscal package.
In addition, WTI’s prompt time spread flashed a warning, holding at 3 cents in contango, a bearish pattern where near-term prices are cheaper than those further out. A week ago, the front-month contract was backwardated.