Oil Nudges Down but Secures Weekly Gain on Recovery Hopes

Oil
FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford

NEW YORK ⸺ Oil settled modestly lower on Friday but secured a weekly gain on a stronger demand outlook and signs of economic recovery in China and the United States that offset concerns about rising COVID-19 infections in other major economies.

Brent crude settled down 17 cents, or 0.3%, at $66.77 a barrel. The global benchmark finished up 6% on the week after rising in the past four sessions. 

U.S. West Texas Intermediate (WTI) crude settled down 33 cents, or 0.5%, at $63.13.

China’s first-quarter gross domestic product jumped 18.3% year on year, official data showed. That followed a big increase in U.S. retail sales and a drop in unemployment claims released on Thursday.

“Strong economic data, spurred by the Biden $1,400 stimulus check, is a huge positive development for the energy patch,” said Bob Yawger, director of energy futures at Mizuho.

This week, both the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) increased their forecasts for oil demand growth for 2021, citing the stronger-than-expected rebound in activity in certain economies. [IEA/M] [OPEC/M]

Those forecasts were also supported by Wednesday’s government data that showed overall U.S. crude inventories fell by 5.9 million barrels as refining activity picked up. [EIA/S]

Not all economies are recovering, however, as India’s coronavirus infection rate hit a record while Germany’s chancellor on Friday said a third wave of the virus had the country in its grip.

Oil has recovered from pandemic-induced lows last year, helped by record cuts to oil output by OPEC and its allies, a group known as OPEC+.

Some of the OPEC+ cuts will be eased starting in May, and the group meets on April 28 to consider further tweaks to the supply pact.

In rival producer the United States, however, the number of drilling rigs has risen to the highest level since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Reporting by Laura Sanicola; Additional reporting by Alex Lawler in London, Sonali Paul in Melbourne and Roslan Khasawneh in Singapore; Editing by Marguerita Choy, Will Dunham, Mark Potter and Jonathan Oatis; Reuters

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