Oil edges higher with dollar slipping but virus worries linger

Oil rose above $64 a barrel in New York, aided by a recovery in equities and a softer dollar.

West Texas Intermediate increased one per cent, reversing some of Thursday’s slump as the dollar’s drop makes commodities priced in the currency more attractive. Prices are still headed for a weekly fall with the spread of COVID-19 in Asia menacing demand.

Singapore will reimpose curbs, Japan plans to extend restrictions and China saw its first coronavirus infections in about a month. Key oil importer India continues to report more than 300,000 cases a day.

Oil has rallied this year with the rollout of vaccines. But the gains have stalled since early March amid infection flare-ups in Asia and concerns over inflation. This week’s decline in prices has come despite the International Energy Agency saying the global glut that built up last year has cleared. Federal Reserve policy makers also signaled continued backing for the U.S. economy.

“The energy market is benefiting from the general risk-on rally following yesterday’s broad-based selloff in risk assets over U.S. inflation concerns,” said Kevin Solomon, an analyst at brokerage StoneX Group. “The market will be angling for any further evidence for improvements in oil consumption.”

Prices

  • WTI for June delivery rose 66 cents to $64.48 a barrel as 10:08 a.m. London time
  • Brent for July settlement gained one per cent to $67.72 a barrel
  • Prices are 0.8 per cent lower this week

The recovery in the U.S. has been solid, boding well for energy consumption in the world’s largest economy. President Joe Biden’s administration announced Thursday that fully vaccinated Americans can ditch masks in most settings.

But India’s sustained struggle with the latest outbreak is continuing to impact markets. Some local ports have declared force majeure due to staffing shortages. Still, the country’s biggest refiner Indian Oil Corp. has issued three tenders to buy oil for loading in the next two months.

© 2021 Bloomberg L.P.

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