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Oil prices climb on hopes for economic recovery

imageCommodities1 hour ago (May 17, 2021 10:01AM ET)

(C) Reuters. FILE PHOTO: An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

By Bozorgmehr Sharafedin

LONDON (Reuters) -Oil prices held firm on Monday, trading in a tight range as European economic reopenings offset gloom from surging coronavirus cases in Asia, fresh restrictions and underwhelming Chinese manufacturing data.

Brent crude rose 14 cents, or 0.2%, to $68.85 a barrel at 1341 GMT, and West Texas Intermediate (WTI) U.S. crude was up 22 cents, or 0.3%, at $65.59.

“The fact that prices remained relatively stable … indicates that the confidence in a healthy oil market remains intact and unless something unpredictably negative occurs, any downside potential will be limited,” PVM Oil analyst Tamas Varga said.

The British economy reopened on Monday, giving 65 million people a measure of freedom after a four-month COVID-19 lockdown.

With accelerating vaccination rates, France and Spain have relaxed COVID-related restrictions, and Portugal and the Netherlands on Saturday eased travel restrictions as the holiday season approaches.

The promise of economic growth has supported oil prices in recent weeks, although the pace of inflation has kept many investors concerned about the possible rise of interest rates and fall of consumer spending.

Worries about the spread of the coronavirus variant first detected in India are also making investors cautious.

Some Indian states said on Sunday they would extend lockdowns to help contain the pandemic, which has killed more than 270,000 people in the country.

Domestic sales of gasoline and diesel by Indian state refiners plunged by a fifth in the first half of May from a month earlier.

Singapore is preparing to close schools this week and Japan has declared a state of emergency in three more prefectures to contain outbreaks.

“The market is seemingly trapped between observing encouraging improvements in demand in the United States and Europe, and the sluggishness in consumption due to the persistence of COVID-19 in Asia,” StoneX analyst Kevin Solomon said.

China’s factories slowed their output growth in April and retail sales significantly missed expectations as officials warned of new problems affecting the recovery in the world’s second-largest economy.

China’s crude oil throughput rose 7.5% in April from the same month a year ago, but remained off the peak seen in the last quarter of 2020.

On the U.S. East Coast, gasoline shortages eased on Sunday, with 1,000 more stations receiving supplies as Colonial Pipeline’s 5,500-mile (8,900-km) system recovered from a cyberattack.

U.S. energy firms added oil and natural gas rigs for a third week in a row as higher crude prices prompted some drillers to return to the wellpad, energy services firm Baker Hughes Co said on Friday.

Oil prices steady on hopes for economic recovery

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