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Futures Movers: Oil on track for weekly gains as reopening optimism outweighs COVID worries

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Oil futures edged lower Friday but remain on track for weekly gains as optimism over the economic reopening in the U.S. and Europe rises, though concerns remain about the surge in COVID-19 cases in India.

West Texas Intermediate crude for June delivery
CL00,
-0.62%

CLM21,
-0.62%

fell 15 cents, or 0.2%, to $64.56 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark on track for a 1.6% weekly rise. July Brent crude
BRN00,
-0.50%

BRNN21,
-0.50%
,
the global benchmark, was off 9 cents, or 0.1%, at $68 a barrel on ICE Futures Europe. Brent is up 1.9% for the week.

“Reopening optimism is playing out in the commodities market, where base metals and oil have been beneficiaries,” said Sophie Griffiths, analyst at Oanda, in a note. “As more evidence of a global economic rebound comes through, oil bulls are gaining in confidence.”

Strong economic data out of the U.S. and China and optimism over prospects for Europe as vaccine distribution improves has helped buoy oil, analysts said.

At the same time, upside has been limited, with Brent failing earlier this week to top the $70-a-barrel threshold, as COVID-19 cases continue to surge in India, the world’s third-largest oil importer.

Indian Prime Minister Narendra Modi is under growing pressure to impose a nationwide lockdown.

On Friday, India recorded a record of 414,188 confirmed cases in the past 24 hours, bringing its tally to more than 21.4 million since the pandemic began with little prospect seen of bringing down the curve in the short term, according to the Associated Press. The Health Ministry also reported 3,915 additional deaths, bringing the total to 234,083. Both figures are likely undercounted, according to experts.

“Near term, the main risk to oil prices is the spiraling COVID crisis in India,” Griffiths said. “Looking further out, the U.S.-Iran efforts to revive the nuclear agreement could result in sanctions being lifted, but for now, this is a sideshow.”

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