Singapore — Oil prices extended gains on Friday and were on course for a weekly gain of more than 6% with an improved oil demand outlook and strong economic recoveries in China and the US offsetting concerns about spikes in Covid-19 infections.
Brent crude futures rose 13c, or 0.2%, to $67.07 a barrel at 5.08am GMT, after a 36c rise on Thursday.
US West Texas Intermediate (WTI) crude futures were 12c, or 0.2%, higher to $63.58 a barrel, after climbing 31c on Thursday.
China’s 2021 net crude oil imports are forecast to grow 3.4% this year vs 2020 to about 11.2-million barrels a day, a unit of top oil and gas group China National Petroleum Corporation said.
China also reported a record 18.3% jump in economic growth in the first quarter from a coronavirus-induced slump earlier last year.
Strong economic recoveries around the world and supply curbs by Opec and its allies, together called Opec+, as well as a cautious response to higher prices by US oil producers are supporting the market, said Westpac senior economist Justin Smirk.
“We still think there’s a clear risk prices could rise to $70 a barrel before we see a more meaningful pull back,” Smirk said.
He said the longer prices stay elevated, the more supply is likely to return to the market, and the risks of Covid-19 cases spiking in places such as India and Europe could eventually drive prices down.
Taking into account worsening coronavirus developments in some countries, “crude overshot to the upside this week and a pullback is now due,” said Vandana Hari, energy analyst at Vanda Insights.
“India and major economies in Europe need to be reckoned with to complete the oil demand picture,” said Hari.
India breached 200,000 daily infections for the first time on Thursday.
For the moment, a strong jump in US retail sales, a drop in unemployment claims and signs of more cars on the road in the world’s biggest economy buoyed the market.
“The reopening of the [US] economy has already seen traffic levels increase in various states across the nation,” ANZ analysts said in a note, adding that India and China are also showing “high levels of congestion”.
Traders are looking ahead to a pickup in traffic typical in the US in June through August.
“With miles driven on the US highways up for the first time since the pandemic outbreak, it means we are well on the way to a bountiful US summer driving season that could come close to matching the summer of 2019,” Axi chief global market strategist Stephen Innes said in a note.