Singapore — 0317 GMT: Crude oil futures were higher in the mid-morning trade in Asia April 23, as optimism over the reopening of Europe lent support to the market, even as concerns remained on the progression of the pandemic in India.
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At 11:17 am Singapore time (0317 GMT), the ICE Brent June contract was up 27 cents/b (0.41%) from the April 22 settle at $65.67/b, while the June NYMEX light sweet crude contract was 36 cents/b (0.59%) higher at $61.79/b.
Market analysts said that oil prices pared their loses in the week of April 18 due to an improved outlook for Europe. COVID-19 cases in major European economies have plateaued and countries such as Italy, Greece and France are on track to ease some of their mobility restrictions, according to media reports.
"There is cautious optimism over the reopening of Europe, and that has offered support to the market after the pull-back in prices seen this week" Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on April 23.
Meanwhile, concerns over the rise in COVID-19 infection numbers in India, the third largest oil importer in the world, continued to persist, capping upside in the market. The country reported record highs of 314,644 cases and 2,104 deaths on April 21, latest data from John Hopkins university showed.
Analysts noted that volatility in the market seen in the week of April 18 comes from the tussle between a bullish outlook for oil demand in the US and Europe, and a bearish outlook in India.
Hari echoed the above sentiment, but reassured that "with India ruling out draconian lockdowns like those seen last year, the market is not taking a very dim view of Indian oil demand; we may merely see it pullback a little."
On the supply-side, the oil market is currently grappling with the prospect of higher Iranian exports. "US-Iran discussions are progressing as the US is now signaling it is open to easing sanction [and] a deal will ultimately lead to a ramp-up in production from Iran," Stephen Innes, chief global market strategist at Axi, said in an April 23 note.
The possibility of increased oil exports from Iran comes with Saudi Arabia and the OPEC+ coalition set to increase their oil production May onwards. As per the decision made during the April 1 meeting, the producer group will raise its collective output by 350,000 b/d in May, another 350,000 b/d in June, and 441,000 b/d in July.
Saudi Arabia, which is currently in the middle of an additional 1 million b/d cut, will also ease the cut by 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July.
The OPEC+ coalition is set to meet on April 28 to review the decision made April 1, but analysts expect no change to the impending production increases.
"The OPEC+ meeting next week is likely to be a non-event, but it may draw the market's attention to the upcoming production increase, and put pressure on prices," Hari said.