FX.co ★ Oil prices rise in hopes of improved demand in the summer

On Thursday, oil prices continue to grow after rising by 1% in the previous session. The impetus is the expectations of market participants to increase the demand for energy in the coming summer months. There are concerns about the strong spread of COVID-19 among the population of India, Japan, and Brazil that oddly almost do not affect the unexpected optimism in the market.

So, Brent crude oil for June rose in price by 0.6%, to the level of $67.47 per barrel. US West Texas Intermediate (WTI) crude rose by 0.6% to $ 64.52 a barrel in June.

Earlier this week, OPEC+ countries maintained their earlier decision to gradually reduce restrictions on oil production in the period from May to July, and this is due to expectations of growing demand for the current year. The alliance does not exclude the fact that global reserves will grow to 2.95 billion barrels in July.

And while the COVID-19 pandemic continues to wreak havoc in some countries, oil demand is steadily recovering. No one has canceled the deferred demand for travel, which, if the situation with the coronavirus improves, promises to generate high demand for fuel in both Europe and North America. Analysts of the largest international Citibank expect that vaccination against coronavirus in these regions will lead to an increase in demand for black gold in the summer to an all-time high of 101.5 million barrels per day.

In addition, fuel consumption in China is expected to increase during the upcoming long weekend, as Chinese residents traditionally travel a lot during the holidays.

At the same time, India is almost unsuccessfully fighting the second wave of COVID-19. The total number of deaths from this disease on Wednesday exceeded 200 thousand. The total number of detected cases of coronavirus in India has reached almost 18 million, while the number of deaths recorded per day is 3293. The situation is aggravated by a large shortage of hospital beds and medical oxygen. Many residents of the country can not sign up for vaccination, which is scheduled to start in May. Unfortunately, although India is one of the world's largest vaccine producers, it does not yet have the necessary supplies for the nearly 600 million people who are waiting to be vaccinated. The situation is not much better in Brazil and Japan.

In this regard, Citibank experts warn that due to the raging COVID in these countries, there is a high risk of introducing new, more stringent restrictions that can significantly collapse local energy demand. That is why the growth of oil prices is still significantly restrained.

Market participants also focus on the growth of production indicators of refineries in the United States, as well as on the reduction of distillate stocks last week. U.S. crude oil inventories rose by 90,000 barrels last week, according to data released by the Energy Information Administration on Wednesday. Analysts had expected much higher growth rates (by 659 thousand barrels).