Oil prices gained above $60 per barrel for the first time in over a year as supplies tightened world-wide and the demand outlook has turned positive with the roll-out of the Covid 19 vaccination drive.
After a third straight weekly advance, crude futures in London jumped 1.2 percent before retreating marginally today. Since October end, oil has been advancing on breakthroughs in covid 19 vaccine, besides Saudi Arabia's commitment to roll back supplies also weighed. OPEC+ pledged to clear the inventory left behind due to the pandemic but near-term demand outlook is still unclear as a new virus variant is reportedly spreading in the US and other regions globally.
Also, there has been reported strong demand for the commodity from China, which happens to be the world's largest importer, with the number of vessels sailing towards the country reaching a six-month high as on last Friday. Top traders Vitol SA and Gunvor Group Ltd. are however cautious on the recent spike in prices and one technical indicator shows that oil is overbought.
In India, international crude prices touching such levels will have a rub-off effect. As it is we have been seeing petrol and diesel prices hitting new highs every other day which largely was attributed to taxes levied on them and infact the RBI in its recent MPC meet nudged the centre to cut taxes on fuel price.