Crude oil prices up again, after Black April
NEW DELHI : Oil prices climbed higher on Monday, with the international benchmark Brent crude oil trading at $33.42 per barrel, supported by gradual recovery in fuel demand as partial reopening of the economy gathered pace.
The West Texas Intermediate (WTI) prices has also been up and was trading at $30.19 per barrel, after it turned negative in a first last month.
This comes in the backdrop of Brent crude hitting a 21-year low, and US oil futures slumping into negative for the first time in history. The glut in oil overwhelmed the world’s limited storage facilities, triggering a wave of selling by oil traders in April.
While the demand for fuels had almost vanished with most of the world under coronavirus lockdowns, the prices since have recovered.
“We see early signs of a gradual rebalancing of the global oil markets. Early signs of a gradual recovery," Paris-based International Energy Agency (IEA) executive director Fatih Birol said, according to a IHS Markit statement.
The cost of the Indian basket of crude, which comprises Oman, Dubai, and Brent crude, averaged $56.43 and $69.88 per barrel in FY18 and FY19, respectively and $19.90 in April, according to data from the Petroleum Planning and Analysis Cell. The price was $29.63 a barrel on 14 May.
India’s largest refiner, Indian Oil Corp. Ltd (IOC) said last week that the demand for petroleum products is picking up, with the country slowing opening up for business.
India has announced a ?21 trillion stimulus package and on Sunday extended the national lockdown by two weeks till 31 May. The NDA government has opened up red zones to economic activities and permitted transportation within and across states as the government attempts to strike a balance between combating the virus and limiting economic damage from one of the world’s longest community shutdowns.
The development is also important as India is a key refining hub in Asia, with an installed capacity of more than 249.36 million tonnes per annum (mtpa) through 23 refineries. Large Indian refiners include IOC, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, Nayara Energy Ltd (formerly Essar Oil) and Reliance Industries Ltd.
“Refinitiv Oil Research believes that any recovery will be in sight until after the lockdown has eased, by the end of the month, at the earliest," said Yaw Yan Chong, director, oil research (Asia), Refinitiv in a statement.
India also leveraged the low price to its advantage with its strategic crude oil reserves to be full by mid-May, India’s petroleum minister Dharmendra Pradhan recently said.