Crude Oil Markets: bullish sentiment returns with strong economic data from the US and China


Crude oil markets go bullish

Oil price is turning bullish despite the surge in Coronavirus infections in India, Japan, Brazil and Turkey. The devastating consequences, especially in India, are there for all to see.

Although crude oil markets showed a significant anxiety over the development in India and Japan, the world’s third and fourth largest buyers of crude oil, last week, the mood turned positive at the beginning of this week; the trend continues steadily at the moment.

At 0843 GMT, Brent rose 49 cents, or 0.7 percent, to $67.76 a barrel and US West Texas Intermediate crude was up 43 cents, or 0.7 percent, at $64.29 a barrel.  

The positive outlook stems from the fact that the economic recovery in the US is well on track with unemployment figures are falling. The encouraging news from the world’s largest economy appears to be the main driving force behind the oil rally.

Oil investors anticipate a rebound in demand of crude oil in proportion to the promising economic figures.

In China, meanwhile, there is no cause for concern when it comes to Coronavirus infections; China appears to be containing the spread of the disease reasonably well with accelerated vaccine rollout.

Moreover, the economic growth in China is pretty impressive, despite being the initial epicentre of the virus. Analysts believe the demand of crude oil will grow as the economy goes full steam.

The relatively weaker US dollar is also a crucial factor for the rise in price of crude oil: buyers have to spend less local currency in buying oil as a result and it inevitably leads to price hike.

OPEC+ members can congratulate themselves for getting their sums right, although resurgence of Covid-19 on this scale may not have been a factor when the calculations were made, back in March; they expect the demand may reach 6 million bpd.

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