COVID Resurgence in India Poses Risk to Energy Demand
May 3, 2021
Energy prices closed lower on Friday after rallying for a month and rising for this week as traders took profits at the end of the month as the ULSD and RBOB contracts expired. The US dollar also bounced and traded higher putting pressure on commodities. The rising cases of COVID-19 in India remain a concern and we’re still waiting to see how that will impact energy demand.
China had their official manufacturing purchasing managers (PMI) index come in under expectations, and that also helped some of the selling on Friday. The number came in at 51.1 for March, and the expectations was for a 51.6.
According to a Reuters survey, oil prices will increase this year as vaccines revive demand and OPEC+ keeps supply in check, but the worsening COVID situation in India and elsewhere poses a risk. The survey of 49 participants forecasts the Brent would average $64.17 per barrel in 2021, up from last month’s consensus of $63.30 per barrel and $62.30 per barrel average for the benchmark so far this year. WTI crude oil is forecast to average $61.01 per barrel this year. Oil demand is forecast to grow by 5.5 million to 6.5 million bpd this year.
Iran’s chief nuclear negotiator said on Saturday that leaders within expect US sanctions on oil, banks, and most individuals to be lifted. US National Security Advisor Jake Sullivan did however say that talks were “in an unclear place” on Friday.