Oil futures headed higher on Monday, as reports that Yemen’s Iran-backed Houthi rebels attacked a Saudi oil facility lifted tensions in the oil-rich Middle East.
“News of another Houthi attack on a Saudi oil facility during a weekend where geopolitical risk factors for oil are rising,” helped oil prices snap back from last week’s losses, said Phil Flynn, senior market analyst at The Price Futures Group.
The Houthi movement said Monday that it fired drones and ballistic missiles at targets in Saudi Arabia, including some Saudi Aramco facilities, Reuters reported, adding that there was no confirmation from the Saudis.
Oil also saw support from sizable progress in European efforts to vaccinate against COVID-19, which offset some pressure from a global rise in cases of the virus.
Oil is “finally getting some good news from Europe regarding the vaccination programs,” with Germany bringing it “up to more than 12 million jabs, up by a quarter on the week,” said Stephen Innes, chief global markets strategist at Axi, a market update.
Upbeat comments on the economy from Federal Reserve Chairman Jerome Powell, meanwhile, boosted prospects for a rise in demand for energy.
Powell described the U.S.’s current recovery from COVID as at an “inflection point” and projected a strong rebound in coming months, speaking on a “60 Minutes” interview that aired on Sunday.
Powell’s “positive comments on the U.S. economy…ahead of [the] key U.S. driving season help to reassure the outlook for oil demand,” balancing concerns about the continued spread of COVID-19 in some regions, said Innes.
On Monday, West Texas Intermediate crude for May delivery CLK21,
Global benchmark June Brent crude BRN00,
Last week, WTI fell 3.5% and Brent marked a weekly loss of 2.9%, according to Dow Jones Market Data.
On Friday, oil prices fell amid concerns about growing supply and weakening appetite for energy, as global cases of COVID rose in Europe, Brazil and India in particular, prompting prices to post a loss for the week.
India reported more than 168,000 new cases over a 24-hour period on Monday, with that surge nudging the country past Brazil as the second-worst country infected by COVID after the U.S., according to public data.
On top of that, Germany, Europe’s largest economy, said it was preparing new legislation enabling the country to impose national COVID restrictions without regional government approval.
In the U.S., five states—Michigan, New York, Florida, Pennsylvania and New Jersey—accounted for some 42% of newly reported cases.
The oil market has also been concerns about the possibility of a U.S.-Iran nuclear deal leading to the lifting of oil sanctions on Iran, which would add more oil into global supplies.
However, Axi’s Innes pointed out that Iran had already reportedly been ramping up production and exports since U.S. elections last year, and while progress on nuclear talks will “affect sentiment, the actual supply impact is already being felt and much could be in the price.”
Back on Nymex, prices for petroleum products also moved higher. May gasoline RBK21,
May natural gas NGK21,
