Bullish Economic Data Push Oil Prices Higher

Oil futures appreciated on Friday due to bullish economic sentiment, although the gains were insufficient to put prices in positive territory for the week. Upbeat news about the outlook for the US and European economies helped overcome jitters about the frightening rise of Covid-19 cases in India, one of the world's largest oil importers. In London, the front-month contract for ICE Brent rose 71¢ to $66.11 per barrel on Friday, while on Nymex in New York, the contract for West Texas Intermediate (WTI) finished the session up 71¢ to settle at $62.14/bbl. For the week, Brent fell by 66¢ and WTI's June contract dropped by 95¢. The focus has been on India, where hospitals have become overwhelmed with Covid-19 infections and oxygen supplies have diminished, complicating efforts to save lives and diminishing the demand outlook for Asia, the global demand center for oil (OD Apr.22'21). On a brighter note, the US economy was buttressed on Friday by a second week of falling jobless claims, which have now returned to the levels seen in mid-March 2020, when the pandemic was just starting to balloon. In Europe the purchasing managers index (PMI) showed that the eurozone, where powerhouses such as France and Germany have struggled to contain the coronavirus, was finally on the path to recovery. Also propping up futures this week was news that Libya, which earlier in the month had reached 1.3 million barrels per day in oil production, has seen output sink to below 1 million b/d as working capital dries up, according to reports (IOD Apr.20'21). Strong, stable oil prices and Libya's troubles will be in focus during next week's planned meeting of a technical committee of the Opec-plus producers' alliance. Although no major decisions are expected, the meeting will be closely watched for clues as to how countries like Saudi Arabia and Russia view the health of global oil markets. At the beginning of April, the alliance decided to begin releasing the taps in May so that the alliance's output would grow by a combined 2 million b/d by July. At the time, many observers felt this was too much, too quickly, although the opposite -- too little, too late -- has not been ruled out as major economies emerge from lockdowns. "If demand recovers this summer, as is widely expected, we [may] find that Opec-plus might need to ramp up supply far beyond current July 2021 targets ... otherwise, we may see huge crude stockdraws in August and September," wrote Paola Rodriguez-Masiu, vice president of oil markets at Rystad Energy. "Huge crude stockdraws in the second part of the summer season are not yet priced in the curves and could easily lead to a price rally." Gary Peach, Albany