Oil was up on Tuesday morning, paring losses from a day earlier, amid strong economic data from the US and China and the ease of lockdown restrictions in the UK.
A survey from the Institute for Supply Management on Monday showed activity in the US services industry reached its highest level on record in March amid growth in new orders. This indicated the economy is being boosted by vaccinations and fiscal stimulus.
The data came after a jobs report last week beat forecasts with 916,000 added to the US economy last month.
China’s services sector picked up speed in March as firms hired more workers and business optimism surged, a private sector survey revealed.
And in England coronavirus pandemic restrictions are set to ease on 12 April, with the opening of businesses including all shops, gyms, hair salons and outdoor hospitality areas.
Meanwhile, BP (BP.L) said it expects to reach its $35bn net debt target in the first quarter of 2021, following earlier-than-expected proceeds from disposals and a “very strong” quarter.
Oil was down about 4% across both measures a day earlier. This was partly due to OPEC and allies agreeing to monthly production hikes from May to July.
They said they would bring back 350,000 barrels per day (bpd) of supply in May, another 350,000 bpd in June and a further 400,000 bpd or so in July.
Meanwhile there was also fear of a drop in oil demand after UK prime minister Boris Johnson was unclear about whether foreign travel can resume from May as the country tries to limit the spread of the coronavirus and the introduction of new variants into the country.
Prices were also impacted by a surge in coronavirus cases in India.
According to Reuters, the market’s attention is now on indirect talks between the US and Iran as part of negotiations to revive the 2015 nuclear deal between Tehran and global powers.
“A breakthrough in the US-Iran indirect talks in Vienna this week will almost certainly lead to another decisive move lower by oil markets, as fears of more Iranian supply increase,” Jeffrey Halley, a senior Asia Pacific market analyst at OANDA, told Reuters.