WASHINGTON (DTN) -- Bolstered by upbeat economic data out of China, oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange extended gains into early trade Tuesday after Organization of the Petroleum Exporting Countries revised higher its 2021 global oil demand projections to 96.5 million barrels per day (bpd), citing generous stimulus programs in the United States and European Union and further easing of COVID-19 lockdown measures in the second half of the year.
A combination of bullish Chinese data and upward revisions to global oil demand sent oil prices decisively higher on Tuesday, with front-month West Texas Intermediate trading above $60 per barrel (bbl) and international crude Brent for May delivery briefly climbing above $64 bbl. Nearby month ULSD contract on NYMEX added 0.60 cent to trade near $1.8137 gallon and RBOB May futures rallied 1.40 cent to $1.9842 gallon.
China's General Services Business Activity Index, which gives an independent snapshot of operating conditions in the world's second largest economy, rose to 54.3 in March from 51.5 the previous month. The reading represents the fastest growth in China's service-providing businesses since December after a somewhat sluggish start to the year. That incremental improvement was partly captured in OPEC's Monthly Oil Market Report released this morning showing oil demand in is China expected to grow to 14.27 million bpd in the second quarter, up 1.32 million bpd from the January through March period.
Globally, the cartel boosted its 2021 demand forecast by 100,000 bpd for annualized growth of 6 million bpd, with world consumption benefiting from a stronger economic rebound and faster rollout of COVID-19 vaccines. Nevertheless, the demand outlook for the first half of 2021 was adjusted lower to an average of 94.26 million bpd, mainly taking into consideration the recent developments related to COVID-19 measures in Europe Union.
There are now tentative signs the EU vaccine rollout is picking up pace, with Germany and France nearly doubling their daily inoculation rates from the previous week. Mobility data shows traffic activity in Germany and France improved significantly in recent days from otherwise low base from earlier in a year.
At the start of the week, oil prices got a leg up from rising geopolitical tensions in the Middle East after Iran-backed Houthi rebels claimed responsibility for yet another attack on Saudi Arabian oil infrastructure. The assault is yet to be confirmed by Saudi Arabia, but market intelligence reports indicate an industrial hub in Jubail and crude redistribution facility in Jeddah were hit with bomb-laden drones Sunday night. The extent of the damage remains unknown. Houthis stepped up their attacks on the kingdom after the Biden Administration removed the group from the terrorist list in February.
Saudi Arabia intervened in Yemen's civil war in 2015 on behalf of an internationally recognized government against the Iran-backed Houthis rebels, with tens of thousands killed. Attacks by the Houthis have since escalated, with the conflict broadly seen as a proxy war between Saudi Arabia and Iran.
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