Prices fell last week with spreading coronavirus cases in countries such as India tempering optimism around positive signs out of the US and Europe. Futures in New York rose the most in over a week on Friday but were unable to reverse a 1.6% weekly loss as the market weighed a global economic reopening that’s coming in fits and starts. The unprecedented oil inventory glut that amassed during the coronavirus pandemic is almost gone, underpinning a price recovery that’s rescuing producers but vexing consumers. Barely a fifth of the surplus that flooded into the storage tanks of developed economies when oil demand crashed last year remained as of February, according to the IEA.
Last week, oil prices saw their biggest weekly gain since early March as signs emerged of a recovery from the pandemic gaining traction in the US and China. Futures in New York advanced 6.4% last week, despite eking out a slight loss on Friday. On the heels of robust economic figures out of the US, data from China showed its gross domestic product climbed 18.3% in the first quarter from a year prior as consumer spending beat forecasts. In March, China’s refiners processed about 20% more crude than a year earlier, pointing to the strength of the country’s rebound. JPMorgan analysts forecast that Brent would hit $70 again, with a boost in US demand likely bringing OECD inventories back to normal sooner than expected.
The markets posted their worst week since mid-March amid concerns that rising global coronavirus cases slowed economic recovery. West Texas Intermediate futures ended the week down 3.5% to close at $59.32. Brent closed at $62.95. With the OPEC+ countries planning to raise output by some 2 million b/d in May and June, markets now are focused on whether the demand recovery will be enough to absorb growing supplies. While consumption is climbing in India and the US, rising virus cases and stricter travel limits in Europe are muddying the forecast and putting pressure on crude prices.
West Texas Intermediate and Brent crude futures posted solid increases on Thursday after OPEC+ decided to increase production slowly. WTI for May delivery gained $2.29 to $61.45 per barrel. June Brent futures closed at $64.86/barrel, up $2.12. Oil futures received a boost from the OPEC+ group of significant producers’ decision to increase output from May to July.