MELBOURNE: Oil prices rose in early trade on Friday, extending gains from the previous day on optimism about recovering fuel demand worldwide, despite surges in coronavirus infections in some US states and indications of a revival in US crude production.
US West Texas Intermediate (WTI) crude futures gained 15 cents, or 0.4 per cent, to $38.87 at 0009 GMT but were on track for a slight drop for the week.Brent crude futures rose 22 cents, or 0.5 per cent, to $41.27, but were also heading towards a decline for the week.
Analysts said satellite data showing strong pick-ups in traffic in China, Europe and across the United States pointed to a recovery in fuel demand.Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year’s levels, data provided to Reuters by location technology company TomTom showed.
However, sentiment has been dented by fears a spike in COVID-19 infections in southern US states could stall the demand recovery, especially as some of those states such Florida and Texas, are among the biggest gasoline consumers.
“The risk of a fresh outbreak could hit the recovery in demand,” ANZ Research said in a note.The prospect of increased US crude production also kept a lid on gains on Friday.
A survey of executives in the top US oil and gas producing region by the Dallas Federal Reserve Bank found more than a third of executives who cut production expect to resume some output by the end of June and another 20 per cent would reverse shut-ins in July.
WTI would have to be between $36 and $41 a barrel to restore production, nearly a third said in the survey. Another 27 per cent said prices would have to range between $41 and $45 per barrel.