Commodities Update: oil rises, copper continues decline
Oil rose after the OPEC+ alliance agreed to increase oil production gradually over the next three months.
Futures advanced in New York after choppy trading as details of the deal were revealed. The agreement between the Organization of Petroleum Exporting Countries and its allies to increase production from May to July includes a phasing out of Saudi Arabia’s unilateral 1-million barrel-a-day supply cut, according to delegates.
The current plan for the group is to boost output by 350,000 barrels a day in May and again for June, before an increase by 440,000 barrels a day in July.
While the rollout of coronavirus vaccines and supply curbs underpinned a fourth quarterly gain for crude, the rebound has faltered in recent weeks on concern that near-term consumption is at risk, particularly in Europe where France is heading for a month-long lockdown. Still, supplies are expected to tighten into the northern hemisphere’s summer season as economies continue to recover from the pandemic.
“The global picture is mostly a bright one in terms of the economy and oil demand, and there are a few spots like Europe that may be in trouble,” said Michael Lynch, president of Strategic Energy & Economic Research. “But compared to what we saw last year, it looks like we’re still on an upward trajectory for demand and possibly prices.”
- West Texas Intermediate for May delivery gained 60 cents to US$59.76 a barrel at 12:00 p.m. in New York
- Brent for June settlement was rose 41 cents to US$63.15 a barrel
Data from the U.S. and Asia do bolster the case for OPEC+ to loosen the taps. Americans are driving and flying the most since the pandemic began, U.S. refineries are processing the most oil since early March last year, and the nation’s stockpiles have shrunk for the first time in six weeks.
In Asia, Japan’s large manufacturers have turned optimistic for the first time since the fall of 2019, while South Korea’s exports have risen the most in more than two years. Indian gasoline sales topped 2019 levels in March, though diesel sales were lower.
Elsewhere the picture is weaker. In Europe, France’s four-week lockdown begins on Saturday, while Italy and Germany have extended partial shutdowns. The Canadian province of Ontario, home to Toronto and the capital Ottawa, will be locked down for 28 days, CBC News said. And in South America, Brazil detected a new COVID-19 variant as it again saw record deaths.
- Libya’s oil market renaissance continued, with the north African country’s exports hitting a seven-year high in March.
- Iraq’s prime minister said his country had turned a “new page” with Saudi Arabia after he met the kingdom’s crown prince.
- The Suez Canal crisis has a winner: the suppliers of fuel to a flotilla of merchant ships that chose to avoid the Egyptian waterway and instead sail the long way around Africa.