Oil is heading for the biggest weekly gain since early March on optimism the recovery in demand from the Covid-19 pandemic is improving.
Futures in New York were steady Friday and up about 7% this week. China’s economy soared during the first quarter, while industrial output rose in March from a year earlier.
The economic rebound in the U.S. is also accelerating, with data the past couple of days showing jobless claims falling to a new pandemic-era low, retail sales increasing and gasoline consumption expanding.
Bullish data from the world’s top two economies came after the International Energy Agency and the Organization of Petroleum Exporting Countries gave positive outlooks for the global oil market earlier in the week.
The positive momentum has helped oil break out of a narrow range around $60 a barrel, where prices were had been stuck since mid-March.
The market may see a temporary lull due to new virus outbreaks, according to the the IEA, but the agency followed OPEC in boosting its full-year estimates for consumption.
The global recovery from the pandemic is uneven, however. While rebounds are gathering pace in the U.S. and China, other nations are grappling with sharp rises in cases. In India, refineries are diverting oxygen produced at their plants to hospitals to help battle a serious second wave.
“We are going to have period of two steps forward, one step back in the oil market,” said Stephen Innes, chief global market strategist at Axi. “There’s a huge summer driving season coming up in the U.S., but then we have headlines of 200,000 people getting Covid in India in a day.”
West Texas Intermediate for May delivery slipped 2 cents to $63.44 a barrel on the New York Mercantile Exchange at 12:04 p.m. Singapore time after climbing 0.5% on Thursday.
Futures are up the most since the week ended March 5.
Brent for June settlement rose 1 cent to $66.95 on the ICE Futures Europe exchange.
Prices are up 6.4% this week, the most since early January.
The prompt timespread for Brent was 47 cents in backwardation, compared with 40 cents at the start of April.
The market is also facing an increase in supply in the coming months, although OPEC said this week that rising demand should trim global stockpiles, while the IEA said the lingering glut was clearing. The OPEC+ alliance is scheduled to start adding more barrels from May.
China’s gross domestic product climbed a record 18.3% in the first quarter from a year earlier, largely in line with the 18.5% predicted in a Bloomberg survey of economists. The figures released by the statistics bureau Friday are skewed by comparisons from a year ago when the economy was in lockdown.