Oil prices are rising on bullish oil demand and economic sentiments but the resurgance of COVD-19 in India could impact on demand.

The improved outlook on the US economy and oil demand have combined to drive oil prices up to their highest level in six weeks with the $US70 ($90) per barrel mark now within sight for the broader Brent crude benchmark.

Brent crude is currently at $US67.26/bbl while the West Texas Intermediate is trading at $US63.48/bbl.

The US Federal Reserve had noted earlier this year that indicators of economic activity and employment had strengthened amidst progress on COVID-19 vaccinations and that it would continue with its easy money policies to support the economy.

However, Rystad Energy warned that the big surge in Indian COVID cases could upset the nearly balanced global oil market due to a loss of demand from the third-largest importer.

It noted that the crisis is expected to slash Indian oil demand by 575,000 barrels per day (bpd) in April and as much as 915,000bpd in May, which will disturb the almost balanced global oil market and build a sizeable glut.

This coincides with OPEC+ starting to bring additional supply to the market as of May 1 after the oil alliance flagged its confidence in oil demand recovery elsewhere.

Goldman Sachs also believes that the market will keep pushing ahead, flagging that oil could hit up to $US80/bbl in the middle of this year.

Canada seems to fall in the oil bulls camp with a survey by investment bank Raymond James finding that the majority of the country’s mid and small cap oil and gas producers are already planning to increase their capital expenditure this year by a significant margin.

About 51 per cent of these companies will ramp-up production over the coming months if oil prices remain above $US60/bbl.

Likewise, oilfield services companies overwhelmingly expect demand for their services to increase compared to a year ago.

Australian stocks

Shares in mid-cap Australian oil and gas producer Beach Energy (ASX:BPT) plummeted after the company said that it may have to downgrade the value of its assets later this year.

This follows a higher than expected decline in oil production from the Western Flank fields in the Cooper Basin, leading the company to kick off an urgent review of its reserves.

Results at other oil wells were also at the low end of expectations.

Beach has cut its forecast annual production from between 26.5 million barrels of oil equivalent (MMboe) and 27.5MMboe to between 25.2MMboe and 25.7MMboe.