Oil Recovering Thanks to Strong Economic Data and Bargain Hunting

Oil prices rose on Tuesday, April 6 as investors looked to chase bargains following a drop the previous day due to higher OPEC+ production, while prospects for recovery improved thanks to strong economic data from the United States and China.

By 06:46 GMT, Brent crude futures rose 78 cents, or 1.26%, to $62.93 a barrel, after falling 4.2% on Monday.

US West Texas Intermediate crude futures rose 81 cents, or 1.38%, to $59.46 a barrel, after falling 4.6% on Monday.

Market sentiment received a boost from the Institute for Supply Management survey on Monday that revealed that US service sector activity reached an all-time high in March. The data comes after a jobs report on Friday that exceeded expectations by adding 916,000 jobs to the US economy last month.

Positive sentiment was boosted, as a private sector survey revealed that Chinese service sector activity accelerated in March as companies hired more employees and became more optimistic.

In addition, England is set to ease restrictions in the fight against the Coronavirus on April 12, with the reopening of activities including entire stores, gyms, hair salons and outdoor hospitality areas. New Zealand will allow Australians to visit without quarantine from April 9, creating a “travel bubble” for neighboring countries.

Those factors on the demand side helped dispel concerns about a deal struck last week by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC +, to return 350,000 barrels per day of supplies in May and another 350,000 barrels per day in June. June, and another 400,000 barrels per day or so in July.

Saudi Arabia is also set to get rid of an additional voluntary cut of one million barrels per day over those three months. Meanwhile, Iran, an OPEC member exempt from making cuts, has been increasing supplies.