Oil ekes out weekly gain as demand offsets virus fears

Bloomberg

Oil squeezed out its first weekly gain in three on signs that global demand is holding up despite concerns that the renewed spread of the virus could stall the recovery.
Futures in New York rises 0.2% this week, completely recouping a selloff that was stoked by the rapidly spreading delta variant. Fuel demand and road traffic from the US to Asia and Europe remains resilient, underscoring expectations that the recovery hasn’t been derailed and global inventories will continue to shrink.
“The fact of the matter is that we’re not going to see, at least in the US and in Europe, a massive return to strict lockdown,” said Ed Moya, senior market analyst at Oanda Corp.
Crude has rallied nearly 50% this year as ongoing vaccination campaigns have propelled reopenings. Data this week showed gasoline demand is essentially back to normal in many of the biggest consuming countries. Meanwhile, Opec+ and US shale producers have shown discipline in returning shuttered supplies to the
market.
The 7.5% price slump came just a day after the Organisation of Petroleum Exporting Countries and its allies led by Saudi Arabia and Russia finalised an agreement to gradually restore production they halted during the pandemic. Opec+’s modest increase eased fears around concerns of oversupply.
The recent dip in prices is a buying opportunity and Brent prices should hit $100 per barrel next year, said a group of analysts at Bank of America Corp. in a recent note to clients.
This week, Schlumberger and Baker Hughes Inc. suggested the rebound in the US shale patch will likely slow this year as companies keep a lid on spending. Despite a strong recovery in crude prices in 2021, the shale industry is largely resisting adding new supply.
Still, the virus continues to pose a challenge. The Olympics opening ceremony kicked off in a nearly empty stadium in Tokyo, amid a record number of new infections linked to the games. In China, there are signs that a fresh outbreak at the airport in the eastern Chinese city of Nanjing has quietly spread to other provinces.