0249 GMT: Crude oil futures were rangebound, with a slight downward bias, during mid-morning trade in Asia March 12, as further upside was limited after the overnight rally.
At 10:49 am Singapore time (0249 GMT), the ICE Brent May contract was down 16 cents/b (0.23%) from the March 11 settle at $69.47/b, while the April NYMEX light sweet crude contract fell 19 cents/b (0.29%) to $65.83/b.
The overnight rally, driven mainly by the market pricing in the $1.9 trillion US stimulus package which President Joe Biden had made into law late March 11, had ran out of steam at the start of the Asian trading session.
The stimulus package has raised the prospect of increased oil demand, as it promises to expedite global economic recovery. The stimulus package, together with a depreciated US dollar, had sent the ICE Brent and the NYMEX light sweet crude markers hurtling 2.55% and 2.45% higher to $69.63/b and $66.02/b at the March 11 close.
The market also lost its upside momentum after OPEC, in its closely watched Monthly Oil Market Report released on March 11, had lowered its oil demand forecast for Q1 and Q2 by 180,000 b/d and 310,000 b/d, respectively.
"Oil requirements in H1 2021 are adjusted lower, mainly due to extended measures to control COVID-19 in many key parts of Europe. In addition, elevated unemployment rates in the US slowed the recovery process," OPEC said in the report.
"The OPEC has sounded a note of caution on demand outlook and trimmed its production estimates for [Q1 and Q2]. It seems that oil prices are still riding a strong tailwind of reflation, but the upside is getting narrower as prices edge higher," Margaret Yang, DailyFX strategist, told S&P Global Platts March 12.
The outlook for oil over the medium term remains encouraging, as analysts have noted a recovery in demand for downstream refined products. Demand for both crude oil and downstream products is expected to increase further, as vaccines and lockdown measures reign in the pandemic, and as global economic activity picks up.
For the medium term, OPEC remained optimistic. It said that oil demand recovery would be backloaded in the second half of the year and it raised its estimates for Q3 and Q4 by 400,000 b/d and 970,000 b/d, respectively, citing "expectations for a stronger economic recovery with the positive impact of vaccination rollouts".
Overall, OPEC expects oil demand to be 96.27 million b/d in 2021, a 220,000 b/d upward revision of its previous forecast.
