By Geoffrey Smith
biedex.markets — Crude oil prices edged higher on Monday, regaining their footing after a brutal week in which prices slid 7% as traders took a more sober view about the trajectory for oil demand.
By 10:30 AM ET (1430 GMT), futures were up 0.4% at $61.69 a barrel, while futures were up 0.2% at $64.68 a barrel.
U.S. gasoline futures were up 0.8% at $1.9594 a gallon.
The weekend had passed without any major geopolitical news. The most significant event was Saudi Aramco (SE:), the world’s biggest oil production company, upholding its $75 billion dividend, in stark contrast to most of the privately-owned oil and gas companies around the world. Aramco had to borrow some $26 billion to cover the difference between its free cash flow and its dividend cover. CEO Amin Nasser said at a press conference that he was “very bullish” about the outlook for oil demand.
U.S. data indicate that travel demand continues to notch post-pandemic highs: the country registered 1.5 million air travelers this weekend for the first time since last February. In addition, states around the country are mostly continuing the process of reopening their economies – Boston’s ban on outdoor dining, for example, lifts on Monday.
However, the picture is not uniform, especially outside the U.S. German politicians met on Monday to decide a tightening of lockdown restrictions for another month, while Brazil and Chile posted record numbers of new cases. In India, too, the second wave is “out of control,” according to Pantheon Macroeconomics Chief Economist Ian Shepherdson.
“Vaccination campaigns haven’t been as fast as the market had hoped for and consequently this will have an effect on the oil demand recovery, which in turn hurts prices, cutting some growth potential,” said Louise Dickson, an oil markets analyst with Rystad Energy, in e-mailed comments. “If vaccination campaigns continue to face challenges going forward, 2021 may see up to 1 million barrels of oil demand per day not recovering this year, compared to a smooth recovery scenario. It is still early to judge and we have to see how quickly campaigns progress.”