(Bloomberg) -- Oil edged higher after posting a third weekly gain as a demand recovery in key regions raised optimism about rising fuel consumption, despite a Covid-19 flare-up in parts of Asia.
Futures in New York inched toward $66 a barrel after advancing 2.4% on Friday. The U.S. and China along with parts of Europe are rebounding strongly from the pandemic as the vaccination drive accelerates. The prompt timespread for global benchmark Brent oil has also started widening again in a bullish backwardation structure, signaling a tightening market.
China’s economic activity moderated in April from its record expansion in the first quarter, although segments such as industrial output was robust. Apparent oil demand eased slightly from March, but was up from a year earlier.
Oil has managed to break out from a tight range near $60 a barrel and resume its upward momentum, but constant reminders that parts of the world remain far from a full recovery from the pandemic continues to dent the outlook. The coronavirus resurgence in India is still crippling the nation, while Singapore and Taiwan grapple with new outbreaks.
Another wildcard is the prospect of more crude flows from Iran as the nation seeks to revive a nuclear deal and free itself of U.S. sanctions. Talks are ongoing, however, and progress on a solution remains uncertain.
“The recovery happening in Europe and the U.S. is good enough to support oil,” said Stephen Innes, global managing partner at SPI Asset Management. “There will be a lot of pent up demand for gasoline. We may continue to drift here for a little while until the Indian saga starts to ease up a little.”
The prompt timespread for Brent was 36 cents in backwardation -- where near-dated contracts are more expensive than later-dated ones -- compared with 23 cents a week earlier. It narrowed to 17 cents on Thursday.
The U.S. added slightly more than 30,000 cases on Saturday, sending the nation’s rolling one-week average to the lowest level since late last June, according to data compiled by Johns Hopkins University and Bloomberg. In the U.K., more than 20 million people, or 38% of the British adult population, are fully vaccinated against the coronavirus, the government said Sunday.
Meanwhile, the supply of gasoline at pump stations was in the process of returning to normal after the restart of Colonial Pipeline Co., although fuel disruptions may still be seen for weeks in parts of the U.S. East and South
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