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Oil price rebounds on robust economic data from US, China, bargain hunting

Oil prices rose supported by strong economic data from China and the US, recouping some of the losses from the previous session due to rising OPEC+ supply and infections in India and parts of Europe

Oil Prices | crude oil production | Economic recovery

Reuters  |  SINGAPORE 

crude oil prices
Crude oil pump jack

By Shu Zhang and Sonali Paul

SINGAPORE (Reuters) -rose on Tuesday as investors looked for bargains following the previous day's plunge on rising output from OPEC+, while strong economic data from the United States and China brightened recovery prospects.

Brent crude futures rose 78 cents, or 1.26%, to $62.93 a barrel by 0646 GMT, after falling 4.2% on Monday.

U.S. West Texas Intermediate (WTI) crude futures rose 81 cents, or 1.38%, to $59.46, after sliding 4.6% on Monday.

Market sentiment was buoyed by a survey from the Institute for Supply Management (ISM) on Monday showing activity in the U.S. services industry reached its highest level on record in March. The data came after a jobs report on Friday beat forecasts with 916,000 added to the U.S. economy last month.

The U.S. data "underscored growth momentum in the world's largest economy, brightening the demand outlook," said DailyFX strategist Margaret Yang.

Adding to positive sentiment, China's services sector picked up speed in March as firms hired more workers and business optimism surged, a private sector survey showed on Tuesday.

In addition, England is set to ease coronavirus pandemic restrictions on April 12, with the opening of businesses including all shops, gyms, hair salons and outdoor hospitality areas.

New Zealand will allow quarantine-free visits by Australians from April 19, creating a "travel bubble" for the neighbouring nations.

Those demand factors helped offset worries about the agreement last week by the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, to bring back 350,000 barrels per day (bpd) of supply in May, another 350,000 bpd in June and a further 400,000 bpd or so in July.

Saudi Arabia is also set to phase out its extra voluntary cut of 1 million bpd over those three months. At the same time OPEC member Iran, exempt from making voluntary cuts, is boosting supply. [OPEC/O]

The market's attention is now on indirect talks between the United States and Iran in Vienna from Tuesday as part of broader negotiations to revive the 2015 nuclear deal between Tehran and global powers.

The U.S. expected the talks to be "difficult" and does not foresee any early breakthrough.

"A breakthrough in the U.S.-Iran indirect talks in Vienna this week will almost certainly lead to another decisive move lower by oil markets, as fears of more Iranian supply increase," said Jeffrey Halley, a senior Asia Pacific market analyst at OANDA.

Investors are also awaiting the release of U.S. inventory reports from the American Petroleum Institute later on Tuesday, and the Information Administration on Wednesday,

U.S. crude oil inventories were seen falling last week, while distillate and gasoline stocks likely rose slightly, a preliminary Reuters poll showed on Monday.

(Reporting by Shu Zhang and Sonali Paul; Editing by Kenneth Maxwell, Michael Perry and Kim Coghill)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Tue, April 06 2021. 15:26 IST