(Bloomberg) — Oil was steady at the open of trading in Asia as investors assessed the outlook for demand ahead of a key OPEC+ meeting later this week.
Futures in New York traded near $62 a barrel after rising 1.2% on Friday, the most in more than a week. While the U.S. and China are recovering strongly from the pandemic, the market is facing near-term headwinds from a virus flare-up in India. That could pose a problem for the OPEC+ alliance, which have agreed to start adding more supply from May.
See also: India’s Covid Crisis Threatens a Global Oil Recovery: Julian Lee
Oil’s robust start to the year faltered in mid-March as some regions started to see a virus resurgence, although prices are still up almost 30% in 2021. Despite additional barrels set to hit the market next month, global benchmark is firming in a bullish backwardation structure, signaling tightening supply. OPEC+ is scheduled to hold its meeting on Wednesday.
Another wildcard is the prospect of more crude flows from Iran as the nation seeks to revive a nuclear deal and free itself of U.S. sanctions, but talks are ongoing and progress on a solution remains uncertain.
The prompt timespread for Brent was 68 cents a barrel in backwardation — where near-dated contracts are more expensive than later-dated ones. That compares with 40 cents at the start of April.
Signs of strain on India’s oil refiners are starting to emerge. Mangalore Refinery & Petrochemicals Ltd. has cut processing rates, while Indian Oil Corp. has so far failed to issue an expected tender to purchase West African crude.
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