Oil Heading for Weekly Gain as Investors Bet on Resilient Demand

© Reuters.

(Bloomberg) — Oil was poised for a second weekly gain as investors bet the demand recovery will remain intact despite the latest Covid-19 comeback.

Futures in New York edged lower on Friday, but are up around 2% this week amid a broader market rally and U.S. dollar weakness. The rebound in major economies has helped to underpin fuel consumption and drained stockpiles built up during the pandemic, with Royal Dutch Shell (LON:) Plc Chief Executive Officer Ben van Beurden backing a strong demand recovery, despite the virus flare-up.

The resurgence caused by the fast-spreading delta variant has interrupted the oil rally, however, with prices little changed for July after climbing in seven of the previous eight months. There’s been a spike in infections worldwide and some countries have renewed curbs on movement, most notably in Southeast Asia where vast swathes of the population remain unvaccinated.

The prompt timespread for was 95 cents in backwardation — a bullish structure where near-dated contracts are more expensive than later-dated ones — on Thursday. That compares with 88 cents at the start of the month.

©2021 Bloomberg L.P.

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