Oil heads for $84/barrel as post-Covid recovery gains momentum

London — Oil rose towards $84 a barrel on Tuesday, gaining for a third session, as the US lifting of travel restrictions and more signs of a global post-pandemic recovery lifted the demand outlook, while supply remained tight.

On Monday, travellers took off for the US again, while the passing of US President Joe Biden’s infrastructure bill and better-than-expected exports by China helped paint a picture of a recovering global economy.

Brent crude rose 31c, or 0.4%, to $83.74 a barrel by 11.50am GMT, after gaining 0.8% on Monday. West Texas Intermediate advanced 36c, or 0.4%, to $82.29, also after a 0.8% rise the previous day.

“With the reopening of US borders for vaccinated travellers, jet fuel demand ought to receive a healthy ... boost,” said Tamas Varga of oil broker PVM. “The passage of the $1-trillion US infrastructure bill in Congress is also expected to provide additional help.”

The price of Brent has risen more than 60% this year and hit $86.70, a three-year high, on October 25, supported by supply restraint by Opec and allies, collectively known as Opec+, and recovering demand.

At a meeting last week, Opec+ decided to stick to its existing pace of easing record output cuts and rebuff US pleas to pump more — helping to keep supply tight for the near term in the view of some analysts.

JPMorgan Chase said global demand for oil in November was already nearly back to pre-pandemic levels of 100-million barrels a day after last year’s collapse.

Biden, however, may take measures as early as this week to address soaring petroleum prices, US Energy Secretary Jennifer Granholm said on Monday.

Despite a tight global market, US crude inventories are expected to have risen for a third straight week, possibly helping to cap further gains in prices.

The first of this week’s two supply reports, from industry group the American Petroleum Institute, is due at 20.30pm GMT. 

Reuters