Oil prices edged higher on Wednesday on the prospects for stronger global economic growth amid increased COVID-19 vaccinations and a report that crude inventories in the United States, the world’s biggest fuel consumer, fell.
Brent crude futures for June rose by 16 cents, or 0.3 per cent, to $62.90 a barrel by 0657 GMT while U.S. West Texas Intermediate crude for May was up 14 cents, or 0.2 per cent, to $59.47.
The International Monetary Fund (IMF) in its April 2021 World Economic Outlook (WEO) presented Tuesday projected a six percent growth for the global economy in 2021, moderating to 4.4 percent in 2022, while the estimated growth for Sub-Saharan Africa, at 3.4 percent, with South Africa at 3.1 percent. and Nigeria’s economy, another oil producer to grow by 2.4 percent in 2021.
This is in effect which means that the global economy is recovering, in addition to the spread of vaccination, are the push for the oil price which had plunged in 2020.
But optimism about talks between the United States and Iran over Iran’s nuclear programme and an impending increase in supply by major oil producers capped gains.
“Optimism on the global economic outlook boosted sentiment in the crude oil market,” analysts from ANZ bank wrote in a note on Wednesday.
Prices were buoyed as data on Tuesday showed U.S. job openings rose to a two-year high in February while hiring picked up. This followed earlier data showing improvement in the services sectors in the U.S. and China.
The International Monetary Fund said on Tuesday unprecedented public spending to fight COVID-19 would push global growth to 6% this year, a rate unseen since the 1970s.
Optimism on a wider rollout of vaccines also boosted prices with U.S. President Joe Biden moving up the COVID-19 vaccine eligibility target for all American adults to April 19.
U.S. crude oil stockpiles fell more than expected in the week ended April 2, while fuel inventories rose, according to three market sources, citing American Petroleum Institute (API) figures ahead of government data on Wednesday.
Oil production in the U.S. is expected to fall by 270,000 barrels per day (bpd) in 2021 to 11.04 million bpd, the Energy Information Administration (EIA) said on Tuesday, a steeper decline than its previous monthly forecast for a drop of 160,000 bpd.
Iran and world powers held what they described as “constructive” talks on Tuesday and agreed to form working groups to discuss potentially reviving the 2015 nuclear deal that could lead to Washington lifting sanctions on Iran’s energy sector and increasing oil supply.
Oil prices dropped earlier this week after the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, agreed to gradually ease oil output cuts from May.