Oil headed for a second straight weekly advance as investors bet on rising energy demand amid a broader rally in commodities.
West Texas Intermediate futures were steady on Friday. The U.S. benchmark is on track for a 1.7 per cent gain this week and is set for its first back-to-back weekly increase since early March as vaccine-aided economic activity picks up in the U.S., Europe and China. Robust trade data from China highlighted the strength of the global economy.
Though crude is up this week, there remain concerns about the demand recovery as coronavirus waves spread elsewhere, including in key crude importer India. While the Organization of Petroleum Exporting Countries and its allies are adding supply to the market, the group remains confident it will be able to absorb the extra production. U.S. payrolls data due later Friday will yield fresh insights into the rebound.
“A strong U.S. jobs report will provide the energy complex with a hefty dose of bullish impetus,” said Stephen Brennock, an analyst at PVM Oil Associates. “Oil prices have room to run higher in the coming months.”
- WTI for June delivery lost 0.1 per cent to $64.68 a barrel at 9:59 a.m. in London.
- Brent for July settlement was flat at $68.09 a barrel
With prices gaining this week, trading of oil options that could profit from a move up toward $90 and $100 a barrel has surged. The equivalent of more than 30 million barrels of $100 calls have changed hands so far this week.
In India, the third-largest oil importer, a model prepared by advisers to Prime Minister Narendra Modi suggests the outbreak could peak in the coming days. Still, the group’s projections have been changing and were wrong last month.
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