(Bloomberg) — Oil edged higher at the open after a third weekly increase as a demand recovery in key regions raised optimism about rising fuel consumption, despite a Covid-19 flare-up in parts of Asia.
Futures in New York climbed toward $66 a barrel after advancing on 2.4% on Friday. The U.S. and China along with parts of Europe are rebounding strongly from the pandemic as a vaccination drive accelerates. The prompt timespread for global benchmark has also started widening again in a bullish backwardation structure, signaling a tightening market.
Meanwhile, gasoline stations are in the process of returning to normal following the restart of Colonial Pipeline Co. after a cyberattack halted flows, although fuel disruptions may still be seen for weeks in parts of the U.S. East and South.
Oil has managed to break out from a tight range near $60 a barrel and resume its upward momentum, but constant reminders that parts of the world remain far from a full recovery from the pandemic continues to dent the outlook. The coronavirus resurgence in India is still crippling industry, while new outbreaks in Singapore and Taiwan show authorities need to remain vigilant.
Another wildcard is the prospect of more crude flows from Iran as the nation seeks to revive a nuclear deal and free itself of U.S. sanctions, but talks are ongoing and progress on a solution remains uncertain
The prompt timespread for Brent was 34 cents in backwardation — where near-dated contracts are more expensive than later-dated ones — compared with 23 cents a week earlier. It narrowed to 17 cents on Thursday.
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