By Gina Lee
Investing.com – Oil was up Monday morning in Asia on the back of the ever-brightening fuel demand outlook. Investors also now turning their focus to the Organization of the Petroleum Exporting Countries and allies (OPEC+) meeting on Tuesday for clues on supply policy.
rose 0.58% to $69.12 by 12:23 PM ET (4:23 AM GMT) and jumped 0.68% to $66.77.
Oil is poised for a second monthly gain as the U.S., China and parts of Europe continue their economic recovery from COVID-19 and increase fuel demand.
Investors expect that the demand growth will surpass the supply side even if Iran may increase its crude supply. Iran is in talks with other world powers to revive a 2015 nuclear deal and lift U.S. current sanctions against Iran.
“We see demand outstripping supply in the order of 650,000 barrels per day (bpd) and 950,000 bpd in Q3 and Q4 respectively,” ANZ analysts told Reuters, adding that this includes 500,000 bpd of increase in Iranian output.
Meanwhile, OPEC+ ministers will meet on Tuesday. Investors believe that the OPEC+ will continue to gradually ease its current supply cuts until July. They will also be monitoring the meeting for clues on the cartel’s supply policy in the next phase.
“The best course of action for the alliance tomorrow may be to stay on an even keel, maintaining the current pace of tapering…the latest waves driven by virus variants and a slow pace of vaccinations suggests it will be a very gradual exit from the pandemic through the second half.” Vandana Hari, the founder of oil consultancy Vanda (NASDAQ:) Insights, told Bloomberg.
However, data released earlier in the day in Asia said China’s manufacturing Purchasing Managers Index for May fell to 51.0, slightly below the 51.1 figure in forecasts by Investing.com and April’s reading. non-manufacturing PMI was 55 in May.
The mixed data raised concerns that the recovery in manufacturing in the world’s largest importer of crude oil globally might be slowing down.