Market News

(Bloomberg) -- Oil held gains above $64 a barrel on optimism that the resumption of economic activity in the U.S. and Europe will underpin demand.

West Texas Intermediate was little changed, following Monday’s 1.4% increase. The European Union plans to ease curbs for vaccinated travelers this summer, while states around the New York region are set to relax capacity restrictions. That’s offsetting concerns about weaker oil consumption in parts of Asia, including key importer India, where Covid-19 remains rampant.

Oil has soared in 2021 -- amid a broad advance across commodity markets -- as investors bet that the rollout of vaccines will permit a return to pre-pandemic conditions. Reflecting that rebound, Federal Reserve Chair Jerome Powell said on Monday that the U.S. economic recovery is “making real progress,” although he cautioned that the gains have been uneven.

“India’s demand is seen pretty weak now, which is a big issue, but the market seems to have moved past that,” said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific. “A lot of that has to do with the vaccination programs, and U.S. and Europe reopening.”

The market’s strength so far in May will hearten members of the Organization of Petroleum Exporting Countries and their allies as they restore some of the barrels they’ve been witholding. Iraq, OPEC’s second-biggest producer, said prices would probably remain around $65 a barrel in the coming months.

Still, the health crisis in India remains grave as infections and deaths mount, while Prime Minister Narendra Modi resists appeals to impose another nationwide lockdown across the third-largest oil importer. Elsewhere in Asia, nations including Japan, Thailand, Laos, Nepal and Bhutan have also been reporting significant increases infections over the past few weeks.

Among signs of weaker energy demand in India, oil shipments loaded for the nation’s public-sector refiners hit a seven-month low in April, according to analytics firm Vortexa. That slowdown marked “one of the first repurcussions” of the new Covid-19 wave, it said in a report.

Oil’s ascent this year forms a key part of a comprehensive advance in raw materials that has also seen gains in metals and crops. Most-active WTI prices surged 7.5% in April following a 22% rally in the first quarter. Brent’s prompt timespread was 42 cents a barrel, compared with 32 cents about a month ago. That’s a bullish pattern, with near-term prices trading above those further out.