U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday after recovering from earlier losses. The markets are also in a position to post weekly gains.
Traders continue to shrug off the devastating COVID-19 spread in India, labeling the news a short-term event, while betting on stronger demand as the global economy recovers.
Today’s weaker than expected U.S. Non-Farm payrolls report may have been the catalyst that sent prices sharply lower earlier in the session.
Earlier in the session, data from China showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity, but this news was offset by a drop in crude imports.
At 15:17 GMT, June WTI crude oil is trading $64.63, down $0.08 or -0.12%. This is up from an intraday low of $63.90. July Brent crude oil futures are at $68.09, unchanged. Earlier in the session the market traded down to $67.38.
Oil Prices Set for Weekly Gain Despite India Virus Surge
Oil prices steadied on Friday and were set for a weekly gain against the backdrop of optimism over a global economic recovery, though the COVID-19 crisis in India capped prices.
Both Brent and WTI are on track for second consecutive weekly gains as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.
In China, data showed export growth accelerated but crude imports by the world’s biggest buyer fell 0.2% in April from a year earlier to 40.36 million tonnes, or 9.82 million barrels per day (bpd), the lowest since December.
Uneven Oil Demand, Mixed Gasoline Recovery
The resurgence of COVID-19 in countries such as India, Japan and Thailand is hindering gasoline demand recovery, energy consultancy FGE said in a client note, though some of the lost demand has been offset by countries such as China, where recent Labor Day holiday travel surpassed 2019 levels.
“Gasoline demand in the U.S. and parts of Europe is faring relatively well,” FGE said.
“Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season.”
Gasoline is the focus indeed. This week’s high in crude oil occurred on Wednesday after the U.S. Energy Information Administration (EIA) reported an unexpected rise in gasoline inventories, just one day after the American Petroleum Institute (API) reported a large draw.
On Friday, the government reported a smaller-than-expected gain in the number of new jobs added in April. Crude oil prices retreated on the news, but then recovered. Nonetheless, the price action suggests traders were concerned a little that this could dampen gasoline demand. If people are getting hired then they won’t be driving to work. If they don’t drive to work then they don’t buy gasoline.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire