Oil extends gains thanks to robust demand as vaccinations against Covid-19 boost travel sector
As of 8:56am GMT, Brent crude was up 1.05% at $73.45 per barrel, the highest price seen since May 2019. US West Texas Intermediate gained 0.86% to $71.52 per barrel, the highest since October 2018.
North America and most of Europe are returning to motor vehicle traffic comparable to pre-pandemic levels, while coronavirus-related lockdowns and other restrictions are currently being eased or lifted, sending more planes into the air, thus boosting demand for fuel.
“In the short term the oil market may be volatile with frequent pull-backs as crude prices are beginning to struggle as demand in Europe and India faces headwinds,” senior manager of commodities at Phillip Futures in Singapore Avtar Sandu said, as quoted by Reuters.
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“The major trend is, however, still intact and deep pullbacks would provide opportunities for buying the dips,” he added.
Last week, the International Energy Agency (IEA) called on the Organization of the Petroleum Exporting Countries (OPEC) and its allies “to open the taps to keep the world oil markets adequately supplied.”
The OPEC+ group has been curbing output to bolster global prices for oil after the pandemic dragged down demand in 2020. Last month, members of the oil alliance led by Russia and Saudi Arabia maintained strong compliance with agreed targets.
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