Oil held near $42 a barrel in London as investors weighed signs of rebounding demand against a resurgence in new coronavirus cases.
OPEC and its allies are on track to rebalance the oil market and there are encouraging signs of recovery, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told an OPEC+ meeting on Thursday. However, California reported record new virus cases and infections jumped by the more than the weekly average in Florida, which followed a flare up in Beijing last week.
Oil capped its seventh weekly gain in eight on Friday with traders Vitol Group and Trafigura Group saying global demand is recovering rapidly following the easing of lockdown restrictions. Aiding the rebound is global supply cuts, with OPEC output in May falling to an average of 24.19 million barrels a day, from 30.5 million the previous month, the cartel said on Twitter.
“There is good support due to supply-side narratives, although bullish ambitions could be held back by the virus,” said Stephen Innes, chief market strategist at AxiCorp Ltd.
“What’s important is whether governments reimpose wide-sweeping lockdowns. With the overall count low globally, that’s unlikely, whereas proximity or soft lockdowns like in Beijing is likely.”