Oil headed for a weekly gain on further signs that demand is picking up as the world emerges from coronavirus lockdown.
Futures in New York were little changed, after gaining 2.3% on Thursday, and are up about 7% this week. Top trading houses Vitol SA and Trafigura Group said global oil demand is recovering rapidly from its historic nadir. They cautioned, however, that a potential resurgence of the virus is clouding the long-term outlook. China is battling its worst outbreak since Wuhan, while in the U.S., Florida’s new cases rose faster than the past week’s average and Texas hospitalizations climbed for a record seventh day.
U.S. gasoline futures for prompt delivery traded at a premium to the second month contract for the first time in three months on Thursday, in a positive sign that drivers are returning to the roads ahead of the summer holiday season.
U.S. benchmark crude has failed to close above $40 a barrel since early March, despite improving consumption. A stubborn supply glut has capped gains, with higher prices prompting some shale producers to restart wells just weeks after shutting them. Oklahoma City-based Continental Resources (NYSE:CLR) Inc., chaired by billionaire Harold Hamm, said Thursday it will start bringing back some of its shut-in oil production in July but will keep about 50% of output curtailed.
OPEC+ held an online meeting on Thursday finalizing an accord reached in principle earlier this month. Habitual quota cheat Iraq said that it will implement its oil-production cuts in full this month and agreed on the details of how to compensate for falling short of its target in May.
After piling into oil like never before, retail investors are starting to pull back. Traders on Wednesday withdrew $205 million from 12 of the world’s most-watched exchange-traded funds that bet on the price of oil increasing, according to Bloomberg calculations. That’s the biggest collective withdrawal in just under two years.