Oil headed for a back-to-back weekly gain, supported by signs that the global crude market is tightening and a weaker U.S. currency.
West Texas Intermediate, which was 0.5% lower in early Asian trading, has climbed 1.4% since last Friday. Data this week showed a larger-than-expected drawdown in U.S. crude inventories in the run-up to the disruption caused by Hurricane Ida. Separately, the dollar has given up ground further, making commodities including crude cheaper for overseas buyers.
Oil’s climb this week came even as the Organization of Petroleum Exporting Countries and its allies decided to add supply and concerns lingered about the impact of the pandemic on energy demand. In its move, OPEC+ cited lower crude stockpiles in developed countries and an accelerating recovery. There have been positive signs from Asia, too, with revived buying from China’s independent refiners and improved gasoline consumption in India.
In the U.S., oil producers in the Gulf of Mexico are still trying to bring output back online after Ida swept through the region last weekend. Among those affected, Royal Dutch Shell Plc found damage at offshore facilities that transfer supply from its Mars assets. Exxon Mobil Corp. has tapped the U.S. Strategic Petroleum Reserve to revive gasoline production in Louisiana.
Investors including in commodities are awaiting key U.S. payrolls data later Friday for insights into the strength of the labor market recovery, which may help to influence the Federal Reserve’s plan to taper its asset-purchase program. A weaker-than-expected reading may aid the dollar, buoying oil.
Brent’s prompt timespread was 63 cents a barrel in backwardation. That’s a bullish pattern — with near-dated prices trading above later-dated ones — and is up from 56 cents a barrel on Wednesday.