On Friday, oil prices went up and continued the increases from the previous day despite the surge in new coronavirus cases in some US states and signs of reviving US crude oil production as fuel demand showed a gradual recovery globally.
At 01.50 AM GMT, Brent crude oil futures jumped by 1.1% or 47 cents to USD41.52/barrel but also on the way to post a decline for this week. Likewise, the US WTI futures climbed by 1.1% or 42 cents to USD39.14/barrel, also heading to a slight contraction.
According to strategist Michael McCarthy of CMC Markets, the market is likely ignoring supply and demand fundamentals and moving on sentiment to take a positive view on the global recovery despite the soaring new coronavirus cases.
The gradual recovery in fuel demand has started to show in several world’s major cities such as Shanghai and Moscow. In the two cities, location technology company TomTom showed that traffic and congestion were high in the last couple of weeks.
Nonetheless, the number of new coronavirus cases in the US could stall the recovery of demand moreover as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.
The price gains were also capped by the prospect of increases in US crude production. A survey of executives in the top US energy-producing region held by the Dallas Federal Reserve Bank found more than half of executives on production cuts have expected to resume some output by the end of July.
Almost a third of the correspondent said WTI should have to be between USD36-41/barrel for most of the producers to restore oil output. Another 27% said prices would have to range USD41-45/barrel.
