Oil Up as Fuel Demand Outlook Improves But Clouded by Asian COVID Outbreaks

© Reuters.

By Gina Lee

Investing.com – Oil was up on Monday morning in Asia as investors are optimistic about the recovery of fuel demand in key markets, despite concerns over the COVID-19 resurgence in parts of Asia.

rose 0.51% to $69.06 by 11:16 PM ET (3:16 AM GMT). jumped 0.52% to $65.70, and rolled over to the Jul. 21 contract on May 16.

Crude demand is increasing as the U.S. and parts of Europe continue their economic recovery from COVID-19 thanks to an accelerating COVID-19 vaccination rate. In the U.K., the government said on Sunday that more than 20 million people, or 38% of the British adult population, have been fully vaccinated against COVID-19.

On the supply front, pump stations in the U.S. are restarting to supply gasoline as Colonial Pipeline is slowly restarting its entire pipeline system after being hit by a cyber-attack earlier in the month.

Meanwhile, U.S. energy firms added oil and rigs for three consecutive weeks due to higher crude prices, energy services firm Baker Hughes Co. said on Friday.

However, parts of Asia, including Singapore and Taiwan, are seeing new outbreaks of COVID-19 cases. Meanwhile, Japan on Friday further expanded a COVID-19 state of emergency before the beginning of the Tokyo Olympics in July and some Indian states said on Sunday that they would extend COVID-19 restrictions.

“Oil prices are under pressure as a spike in the COVID-19 pandemic is spreading from India to other parts of Asia, which increased concerns over slower recovery in fuel demand,” Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co., told Reuters.

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Data from China, the world’s biggest oil importer, released earlier in the day also disappointed as the country’s growth slowed down to 9.8% year-on-year in April.

Across the Middle East, Israel and Palestinians’ conflict moved into its second week, with no clear end in sight to the violence.

However, some investors remained optimistic.

“As long as the fight does not spill over to oil-producing countries in the region, there will be limited impact on the oil market,” Fujitomi’s Saito said.

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