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.
