Oil Gains With OPEC+ and BP Seeing a Strong Demand Recovery

Futures in New York rose above $62 a barrel after slipping 0.4% on Monday. An OPEC+ technical committee raised its forecast for demand growth in 2021, but cautioned that a resurgent virus in India, Japan and Brazil could derail the oil demand recovery. India’s second wave has been particularly deadly as it overwhelms the health-care system and cripples fuel consumption.

Still, the outlook beyond those countries remains robust. Shipping giant A.P. Moller-Maersk A/S raised its earnings guidance citing surging demand for its services, underscoring a boom in global trade. All the while road use continues to recover in the U.S. and U.K.

The deteriorating outlook in some countries may pose a challenge to the Organization of Petroleum Exporting Countries and its allies when it meets for a monthly ministerial meeting on Wednesday to discuss its production policy, although the group has already agreed to start adding more supply to the market from May. But the alliance will have to counterbalance that with a robust picture elsewhere. OPEC Secretary-General Mohammad Barkindo said Monday that there are “positive signals” the global economy is recovering.

“You’re seeing incredibly strong demand in America and China,” said BP Plc Chief Executive Officer Bernard Looney in a Bloomberg TV interview, adding that China’s oil demand is above pre-pandemic levels.

“America is almost back to where it was. The vaccines are going to kick in now in Europe. Then of course the question is what happens in the rest of the world,” he added.

The OPEC+ committee of technical experts forecast that oil consumption will rebound by 6 million barrels a day this year, according to delegates who attended the panel on Monday. Most of the fuel inventories glut built up during the pandemic will have cleared by the end of this quarter, they said.

The recovery is being driven by a strong rebound in China and the U.S., while there are some positive signs emerging in parts of Europe. South Korea’s economy recovered at a stronger pace than expected last quarter, as investment picked up with export growth.