Oil edged lower on Friday, but prices are still heading for a weekly gain as signs of strengthening demand and an expected recovery in demand outweighed concerns about higher COVID-19 cases in Brazil and India.
Brent futures rose $1.29, or 1.9%, to settle at $68.56 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.15, or 1.8%, to end at $65.01. That put both benchmarks up for a third day in a row to their highest closes since March 15.
There’s been a raft of bullish calls on the market this week, with the OPEC+ alliance raising its oil demand forecast for this year, despite the coronavirus crisis enveloping key oil consumer India.
Goldman Sachs is forecasting oil demand will post a record jump as the world opens up again amid the Covid-19 vaccination rollout. The firm is raising its outlook on oil based on this expected upswing in demand.
The coronavirus is still looming over the market, however, with a resurgence in regions such as India clouding the near-term outlook.
OANDA’s Senior Market Analyst Edward Moya said that the crude demand outlook is getting a big boost from Europe and that should overcome some of the risks across India and many emerging markets.
Analysts at Citibank said vaccination campaigns in North America and Europe should enable oil demand to reach a record high of 101.5 million barrels per day over the northern hemisphere summer months, but warned rising COVID-19 cases in Brazil and India could hit local demand if stricter lockdowns are reimposed.
“The outbreak in India is holding back oil’s rally,” Howie Lee, an economist at Singapore’s OCBC bank, said.
In Europe, major energy companies, including BP PLC, Total SE, and Equinor ASA, profited from higher oil prices to report big increases in first-quarter earnings.