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Oil steady near four-week highs on demand revival

Brent crude futures fell 17 cents, or 0.3 per cent, to $66.77 a barrel

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Oil prices dipped in early trade on Friday but were on course for a weekly gain of more than 6 per cent with an improved oil demand outlook and strong economic recoveries in China and the United States offsetting concerns about spikes in Covid-19 infections.

Brent crude futures fell 17 cents, or 0.3 per cent, to $66.77 a barrel at 6:22 am, following a 36 cent rise on Thursday.

US West Texas Intermediate (WTI) crude futures were down 19 cents, or 0.3 per cent, to $63.27 a barrel, after climbing 31 cents on Thursday.

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 up 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 like India and Europe could eventually drive prices down.

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 pick-up in traffic typical in the United States 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.

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Published 16 April 2021, 02:07 IST

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