Oil headed for the best weekly gain since October as focus shifted to the US stimulus outlook and a storm menacing the Gulf of Mexico.
Futures in New York edged above $68 a barrel and are up more than 9% for the week, even after falling on Thursday. The market has been buoyed in part by China’s containment of its latest Covid-19 outbreak, while banks including Goldman Sachs Group Inc. reiterated their bullish confidence in the outlook.
Focus now turns to a speech from Federal Reserve Chair Jerome Powell later Friday for insights into how bond purchases may be eased, and Tropical Storm Ida, which has already led to offshore oil output shutting in the Gulf.
Oil has surged this week despite Covid still lingering
Oil has had a volatile August with the fast-spreading delta variant of the virus leading to renewed restrictions on mobility and clouding the outlook for fuel demand. OPEC+ is scheduled to meet next week after agreeing to keep adding supply until all of its production curbs are revived, and the market will be watching for any change to its guidance.
Three of the Fed’s leading hawks urged policy makers move quickly to slow asset purchases despite the risk of delta. The dollar held a gain. A stronger US currency makes commodities such as oil less attractive to investors.
“Uncertainty is likely to linger until Powell’s speech later today,” said Vandana Hari, founder of energy consultant Vanda Insights. “In the meantime, Tropical Storm Ida has emerged as a prop for crude. Precautionary oil and gas production shut-ins in the Gulf of Mexico are supportive for sentiment.”
West Texas Intermediate for October delivery rose 1% to $68.07 a barrel on the New York Mercantile Exchange at 11:27 a.m. in Singapore after falling 1.4% in the previous session.
Prices are up 9.2% this week.
Brent for October settlement gained 1.1% to $71.83 on the ICE Futures Europe exchange after losing 1.6% on Thursday.
The prompt timespread for Brent was 95 cents a barrel in backwardation — a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 38 cents on Monday.
BP Plc and Royal Dutch Shell Plc are among producers that have begun shutting production in the Gulf of Mexico ahead of Ida. Based on the latest forecast by the National Hurricane Center, the storm will be at least a Category-2 hurricane by the time it makes landfall near New Orleans early next week.