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Oil climbs on stronger economic outlook

April 08, 2021 00:00:00

SINGAPORE, Apr 07 (Reuters): Crude prices moved higher on Wednesday on the prospects for stronger global economic growth amid increased COVID-19 vaccinations and a report that inventories in the United States fell.

But optimism about talks between the United States and Iran over Iran's nuclear programme and an impending increase in supply by major oil producers capped gains.

Brent crude futures for June rose by 16 cents, or 0.3 per cent, to $62.90 per barrel by 0657 GMT on the day while US West Texas Intermediate (WTI) for May was up 14 cents, or 0.2 per cent, to $59.47.

"Optimism on the global economic outlook boosted sentiment in the crude oil market," analysts from ANZ bank wrote in a note on Wednesday.

Prices were buoyed as data on Tuesday showed US job openings rose to a two-year high in February while hiring picked up.

This followed earlier data showing improvement in the services sectors in China, the world's second biggest fuel oil consumer, and the USA, the top oil consumer in the globe. The International Monetary Fund (IMF) said that unprecedented public spending to fight coronavirus would push global growth to 6.0 per cent this year, a rate unseen since the 1970s.

Optimism on a wider rollout of vaccines also boosted prices with US President Joe Biden moving up the COVID-19 vaccine eligibility target for all American adults to April 19. US crude stockpiles fell more than expected in the week ended April 02, while fuel inventories rose, according to three market sources, citing American Petroleum Institute (API) figures ahead of Wednesday's government data.

Oil production in the United States is expected to fall by 270,000 barrels per day (bpd) in 2021 to 11.04 million bpd, the Energy Information Administration (EIA) said on Tuesday, a steeper decline than its previous monthly forecast for a drop of 160,000 bpd.

Iran and world powers held what they described as "constructive" talks on Tuesday and agreed to form working groups to discuss potentially reviving the 2015 nuclear deal that could lead to Washington lifting sanctions on Iran's energy sector and increasing oil supply.

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