The country has been reporting record daily new cases in recent days and on Monday, the capital New Delhi announced a six-day lockdown as hospitals are overwhelmed with patients with severe COVID symptoms. Earlier this month, the biggest city and financial center, Mumbai, was also placed on lockdown until the end of this month, threatening the recovery of fuel demand in the country.

Last week, a flurry of bullish news pushed oil higher by 6 percent for the week, despite the continued concerns about demand in India and other major economies.

The U.S. weekly jobless claims hit their lowest since the pandemic started, while advance estimates showed that U.S. retail slaes jumped by 9.8 percent in March 2021 from February, and by 27.7 percent compared to March 2020. The EIA reported a draw of 5.9 million barrels in U.S. crude oil inventories in the week to April 9, while both OPEC and the International Energy Agency (IEA) lifted their forecasts for this year’s global oil demand growth, due to expected stronger economies.

Crude oil prices “closed above their recent ranges on Friday, but with global virus cases hitting new records, the prospect for a sustained rally at this stage seems limited,” Saxo Bank said on Monday. “With the prospect of additional barrels over the coming months from OPEC+, Iran and the U.S. we see the upside potential in Brent crude limited to $70/b until vaccine rollouts significantly changes the demand dynamics,” Saxo Bank analysts added.

Baker Hughes reported on Friday that the number of oil and gas rigs in the United States increased by 7 this week, bringing the total rig count to 439. Last week, the U.S. oil and gas rig count increased by 2. The total number of active oil and gas drilling rigs in the U.S. is now just 90 fewer than this time last year. The oil rig count increased by 7 this week, bringing the total oil rig count to 344 this week. The number of gas rigs increased by 1 to 94. The number of miscellaneous rigs fell by 1.

The EIA’s estimate for oil production in the United States for the week ending April 9 rose by 100,000 bpd this week to 11 million barrels per day. The EIA estimates that U.S. oil production will reach a modest 11.04 million bpd this year. Canada’s overall rig count decreased this week by 2. Oil and gas rigs in Canada now sit at 56 active rigs, up 26 on the year. The rig count in the Permian basin increased by 3 this week. The Permian’s total rig count is now just 56 rigs below this time last year.

The Frac Spread Count provided by Primary Vision shows that fracking crews are trending upward overall, now hovering above 200, showing a significant increase over the modest double-digit figures seen during the height of the pandemic. The frac spread count, which estimates the number of completion crews finishing off previously drilled wells, came in at 206 according to available data for the week ending April 9. This compares to a frac spread count of just 45 in May of last year

Oil bulls are back, as strong oil demand numbers have put bulls back in the driver’s seat. Not only did we see encouraging data from the Energy Information Administration (EIA), but a report from the U.S. Department of Transportation stated that for the first time since the Covid-19 pandemic started, more people are driving on highways than they were a year ago. Highway traffic is up 1% from a year ago and that number reflects what should be improving trends that we’ve seen in private gas demand forecasts, as well as improving trends from the EIA. And we’re not just on the roads: The EIA showed that jet fuel demand jumped to 1.358 million barrels, up 96 from last week. This reflects reports of rising capacity for airports and airlines. Vaccinated travelers are starting to take advantage of cheaper airfares and hotel deals for spring break, signaling a lot of pent-up travel demand.

This comes as the U.S. supply situation for petroleum is tightening significantly. The EIA reported that U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve (SPR), decreased by 5.9 million barrels from the previous week. The reason I mention the SPR is because there was a release of over 1 million barrels from SPR. Even with that release, crude supplies have fallen to 492.4 million This comes as the U.S. supply situation for petroleum is tightening significantly. The EIA reported that U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve (SPR), decreased by 5.9 million barrels from the previous week. The reason I mention the SPR is because there was a release of over 1 million barrels from SPR. Even with that release, crude supplies have fallen to 492.4 million barrels. U.S. crude oil supplies are just 1% above the 5-year average for this time of year.

If you think that seems tight, take a look at the gasoline supply. The EIA says that total motor gasoline inventories increased by 0.3 million barrels last week, yet are still 2% below the 5-year average for this time of year. Distillate fuel inventories decreased by 2.1 million barrels last week and are about 4% above the 5-year average for this time of year. We saw a big uptick in demand not only in jet fuel, but also from farmers buying their diesel for planting, assuming they can get in the fields.

Overall, total commercial petroleum inventories decreased by 9.1 million barrels last week, which set the stage for yesterday’s sharp rally and new highs since the corrective breakdown in March. Energy watcher Pat Bourque, who correctly called this week’s draw, is calling for even larger draws in the weeks ahead.

Oil prices were supported by Powell’s assessment that the U.S. economy is set for strong growth and job creation with vaccination roll outs and fiscal stimulus. A weaker U.S. dollar also added to investors’ appetite for crude, while another claim from the Yemeni rebel group the Houthis that they had targeted oil facilities of Aramco in Saudi Arabia further supported prices.

In an interview with CBS 60 Minutes published on Sunday, Fed’s chair Powell said that “What we’re seeing now is really an economy that seems to be at an inflection point. And that’s because of widespread vaccination and strong fiscal support, strong monetary policy support. We feel like we’re at a place where the economy’s about to start growing much more quickly and job creation coming in much more quickly.”

The key risk to the economy is a potential resurgence of the coronavirus, Powell warned, noting that social distancing and masks would be a “smart” thing to do as states are re-opening and easing restrictions.

“I’d say that we and a lot of private sector forecasters see strong growth and strong job creation starting right now. So really, the outlook has brightened substantially,” Powell added.

The brighter prospects for the U.S. economy outweighed at the start of the trading week concerns over oil demand in other parts of the world, with COVID cases surging in India, the world’s third-largest oil importer.

Oil prices remain “rangebound with the prospect for stronger economic growth helping to offset the impact of a resurgent coronavirus just as OPEC+ prepares to add supply,” Saxo Bank analysts said on Monday.

“Last week oil posted its worst week in three and while the demand outlook into the second half looks strong, short-term challenges are likely to keep Brent range bound, currently between $60 and $65,” the analysts noted.

Vitol, Shell and Exxon are all expected to announce profits in Q1 2021 following a turbulent 2020. The three companies are profiting from increased oil demand and a rise in oil prices, giving analysts hope for a strong year in oil and gas.  Shell announced this week that it expects to make its first profit from oil production in the first quarter of 2021 since the beginning of the Covid-19 pandemic. The company’s upstream unit, which mainly manages crude exploration and production, has gained from the surge in oil prices over the past few months.

Shell’s statement comes despite targets being hindered by the winter storm that hit Texas in February, decreasing the company’s production by around 20,000 BPD of oil in the first three months of the year, reducing its expected earnings by around $200 million.

Shell was hit hard as oil demand decreased in Q2 of 2020, despite steadily picking up again in the second half of the year before stricter pandemic restrictions were reintroduced. Although Shell remained stable overall, its upstream unit suffered a loss of $1.5 billion in the second quarter of 2020.

BP Plc, another company that was struck hard by the pandemic, announced this week that it has reduced its net debt to $35 billion a year earlier than anticipated, meaning the company can recommence share buybacks.

Exxon Mobil Corp, the largest oil producer in the U.S., is also expected to profit from the increase in demand and oil prices, to earn an estimated $2.55 billion in profit in the first quarter of 2021. The company’s stock has been steadily increasing since the beginning of the year, jumping from $41.50 at the beginning of January to $56.71 this Wednesday.

Exxon experienced consecutive quarterly losses through 2020, owing to the decrease in demand and low oil prices, leading it to reduce operating costs in response to the losses. Company stocks fell to a yearly low of $32.62 in October, before sharply picking up towards the end of the year.

The February storm in Texas also throttled Exxon, which experienced an estimated $800 million in damages, as power cuts to refineries and chemical plants led the company to curb its oil and gas supply. Exxon is expected to announce its first quarter profits by the end of April.

Finally, Swiss oil trader Vitol has announced that despite a fall in oil production levels last year, it achieved a profit through successful trading plays. While the company has not disclosed its 2020 profits, Bloombergy estimates it to be around $3 billion.

This comes despite the company’s oil production falling from 8 million BPD oil in 2019 to a 7.1 BPD average in 2020.

Vitol CEO Russell Hardy stated, “We continue to believe that demand for oil will not peak for another decade, but nonetheless we must position our business for a lower emissions world”. To date, Vitol has invested around $1 billion in green projects, as part of the expansion of its renewable energy portfolio. The company has been primarily focusing on wind, solar and biogas projects across the U.S., which strongly support President Biden’s plan to increase renewable energy production over the next decade.

Despite the global industry appearing to falter under the pandemic conditions of 2020, oil majors are steadily regaining their foothold as global oil demand and oil prices increase.

This rather alarmist missive came on the heels of the then very new president’s decision to pull the plug on the massive Keystone XL pipeline project on his very first day in office. Babin’s sentiments have been echoed by plenty of oilfield insiders and pro-oil pundits who have not been shy about decrying the new administration’s less than cozy relationship with the shale sector.

That sentiment is understandable, with Biden’s Energy Secretary pick Jennifer Granholm issuing an ultimatum to the oil industry to adapt or die. Granholm emphasized that the world is moving away from oil and toward clean energy. “I’m not going to sugarcoat how hard transitions are,” Granholm said at IHS Markit’s annual CERAWeek conference last month, acknowledging that the clean energy transition will be anything but easy for the United States shale patch. “The bottom line is this particular growth of clean energy and reduction of carbon provides a huge opportunity and I’m extending a hand of partnership,” she said.

Despite this rhetoric, it seems that the Biden administration is now throwing the oil industry a bone. The president’s much-touted infrastructure initiative is going to call for asphalt – lots and lots of asphalt – in an unexpected boon for the domestic oil sector. Last week Biden presented his $2.25 trillion infrastructure proposal that will provide a number of economic opportunities for oil, including $115 billion allocated to roads and bridges, and an additional $16 billion to get out of work oilfield laborers back into paid positions plugging abandoned wells across the United States.

The biggest opportunity, however, lies in the sky-high asphalt demand embedded in the infrastructure spending bill. The biggest winners may not be in the domestic market though. Since asphalt is derived from “the heaviest and most-dense material in a barrel of crude” this development could stand to benefit Canada’s struggling oil sands the most, which will be ecstatic for any new market for their heavy crude bitumen.

In fact, while the Biden administration is charging full steam ahead on the clean energy transition, with massive investments into electric vehicles and renewables, it’s clear that they have been listening to the oil sector and have been making a concerted effort not to leave oilfield workers behind. “Since taking office two months ago, Biden’s been more boon than bane for a fossil-fuel industry that was wary of the ascendance of a politician bent on accelerating the energy transition,” Bloomberg reporated last week, citing Goldman Sachs’ assertion that Biden has been bullish for oil overall.

The jobs can’t come fast enough. “Home to the world’s third-biggest oil workforce, the U.S. saw an 11% cut to headcount in 2020 that reduced the ranks of employed to just under 1 million,” Bloomberg reports. “Another 10,000 or so job cuts are expected this year.” While the Biden administration has been straightforward that there will be oilfield industry casualties from the green energy transition, so far it does seem that they’re doing what they can to soften the blow. It appears that even the infrastructure investments into renewable energy will benefit oilfield workers in the end – and ultimately large oil states like Texas will play a major role in the future of wind, solar and energy storage in the U.S.

The American Petroleum Institute (API) on Tuesday reported a modest draw in crude oil inventories of 2.618 million barrels for the week ending April 2.

Analysts had predicted a smaller draw of 1.436 million barrels for the week. In the previous week, the API reported a build in oil inventories of 3.910 million barrels after analysts had predicted a much smaller build of 107,000 barrels.

After tanking on Monday, oil prices were trading up on the day prior to the data release as fears in the market calmed regarding additional supplies that might be brought onto the market should the talks over the Iranian nuclear deal end with lifting U.S. sanctions. WTI Closed at $59.33, or 1.28% higher on the day. Brent crude traded up at $62.79 per barrel or 1.03% up on the day.

As U.S. oil inventories shrink, U.S. oil production rose modestly to 11.1 million bpd during the week ending March 26, according to the latest data from the Energy Information Administration. It is the second increase in as many weeks. The API reported a build in gasoline inventories of 4.553 million barrels for the week ending April 2—after the previous week’s 6.012-million-barrel barrel draw. Analysts had expected a 221,000 barrel draw for the week. Distillate stocks saw an increase in inventories this week of 2.810 million barrels for the week, after last week’s 2.595-million-barrel increase. Cushing inventory figures fell by 84,000 barrels.