Oil prices rose on Monday on optimism over the pace of coronavirus vaccinations in the United States and after the Yemen-based Houthi movement said it fired missiles on Saudi oil sites.
Still, crude prices have remained rangebound in the past three weeks, as growing expectations of surging U.S. economic activity are balanced by the slow rate of vaccination in Europe and anticipation of additional supply from Iran in coming months.
Brent rose 33 cents to settle at US$63.28 a barrel. U.S. West Texas Intermediate (WTI) rose 38 cents to settle at $59.70 a barrel.
The United States has fully vaccinated 22% of its population, while the United Kingdom has vaccinated 11% fully, according to the Reuters vaccine tracker. Still, other countries are not faring as well, with France and Germany at around 6% vaccinated.
“Oil prices rose today as a result of progress in vaccination campaigns in the U.S., which are helping the country’s plan to spend. The upward momentum in other countries is promising, but large discrepancies remain globally,”Louise Dickson, Rystad Energy’s oil markets analyst.
Prices also found some support after Yemen’s Iran-aligned Houthi movement said it had fired 17 drones and two ballistic missiles at Saudi targets, including towards Saudi Aramco refineries in Jubail and Jeddah.
There was no immediate Saudi confirmation. Saudi Aramco, the state oil firm, did not comment when contacted by Reuters.
“While there are still plenty of reasons to be bullish, market players have become more cautious as infections have surged in Europe, India and some emerging markets, while vaccine rollouts have proved slower than anticipated,”Oil broker PVM’s Stephen Brennock.
India now accounts for one in every six daily coronavirus infections worldwide, and cases are also rising in other parts of Asia.
Asian oil demand has remained weak and some buyers have asked for lower volumes in May, partly because of refinery maintenance and higher prices.
In an interview aired on Sunday, Federal Reserve Chair Jerome Powell said the U.S. economy is at an “inflection point” amid expectations that growth and hiring will accelerate in the months ahead, but it faces the risk of reopening too quickly and sparking a resurgence in COVID-19 cases.
On the supply side, U.S. oil output from seven major shale formations is expected to rise for a third straight month, climbing by about 13,000 barrels per day (bpd) in May to 7.61 million bpd, the U.S. Energy Information Administration said on Monday.