Oil rises as the outlook for fuel demand improves but is clouded by Asian COVID outbreaks

© Reuters.

From Gina Lee

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

rose 0.51% to $ 69.06 by 11:16 p.m. ET (3:16 p.m. GMT). jumped 0.52% to $ 65.70 and transitioned to the July 21st contract on May 16.

Crude oil demand rises as the US and parts of Europe continue their economic recovery from COVID-19 thanks to an accelerated COVID-19 vaccination rate. In the UK, the government announced on Sunday that more than 20 million people, or 38% of the UK adult population, have been fully vaccinated against COVID-19.

On the supply front, pumping stations in the US are restarting to deliver gasoline as Colonial Pipeline is slowly restarting its entire pipeline system after being hit by a cyber attack earlier this month.

Meanwhile, US energy companies added oil and rigs for three straight weeks due to higher crude oil prices, energy services company Baker Hughes Co. announced on Friday.

However, new outbreaks of COVID-19 cases are emerging in Singapore and Taiwan. Meanwhile, Japan further expanded the COVID-19 state of emergency on the Friday ahead of the Tokyo Olympics in July, and some Indian states announced on Sunday that they would be extending COVID-19 restrictions.

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

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

Across the Middle East, the Israeli-Palestinian conflict entered its second week with no clear end to the violence in sight.

However, some investors remained optimistic.

“As long as the struggle does not spill over to the oil producing countries in the region, the oil market will have limited impact,” said Saito of Fujitomi.

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