Singapore—0352 GMT: Crude oil futures were steady to slightly higher in mid-morning trade in Asia April 12 as optimism over an accelerated vaccination drive in Europe and an economic recovery in the US were countered by continuing concerns that any resurgence in coronavirus infections could abruptly curtail demand.
At 11:52 am Singapore time (0352 GMT), the ICE Brent June contract was up 4 cents/b (0.06%) from the April 9 settle at $62.99/b, while the May NYMEX light sweet crude contract was 4 cents/b (0.07%) higher at $59.36/b."The market started the week on a positive note after a tug of war between those feeling optimistic over the US economic recovery and those despairing over the pandemic progression in Europe left Brent stuck around the $63/b mark last week," Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on April 12.
"The positive sentiment was due to developments over the weekend, with France, Germany and Italy saying that they are ramping up vaccinations and Jerome Powell [US Federal Reserve Chairman] expressing further confidence over US economic growth accelerating," she added.
However Hari noted the market had not found strong upward momentum amid continuing concerns that the coronavirus pandemic could derail the demand recovery for crude oil.
"Europe is at the epicenter of [coronavirus-related concerns], with several countries forced to increase restrictions to contain the spread of new variants of the virus," ANZ analysts said in a April 12 note.
The ANZ analysts noted that recent rises in infections in other regions had not dented the demand recovery, noting: "India has seen a sharp rise in cases, but gasoline [consumption] was up 27% year on year in March and diesel was up 28% year on year."
Concerns that a resurgence in infections could suppress crude demand comes as OPEC+ supply rose by 450,000 b/d in March as the coalition members' compliance with its production quotas fell to 111% in March from 113.5% in February, and as quota-exempt countries Iran and Libya also ramped up production, S&P Global Platts reported earlier.
OPEC+ supply is expected to rise further in coming months after the coalition on April 1 eased its production quotas by 350,000 b/d in May, 350,000 b/d in June and 441,000 b/d in July. Saudi Arabia, which had pledged an additional 1 million b/d cut, has announced it will ease this by 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July.
The market will also closely monitor developments in indirect talks over a nuclear deal between US and Iranian officials that are expected to resume in Vienna this week. A deal could see the removal of sanctions on Tehran's oil sector and lead to an influx of Iranian oil into the market.
