Crude Oil Edges Higher; Stabilising After Sharp Losses

Commodities & Futures
© Reuters.  © Reuters.

By Peter Nurse – Oil markets edged higher Friday, stabilising after Thursday’s sharp losses but still set to post the first losing week since late April.

At 8:10 AM ET (1210 GMT), futures traded 0.4% higher at $ 36.49 a barrel, after slumping more than 8% on Thursday. The international benchmark contract rose 0.8% to $ 38.84, having dropped nearly 8% the previous session.

Crude has rallied since plunging below zero in April as production cuts trimmed a global glut and the easing of lockdowns boosted fuel consumption.

“Oil prices have rebounded sharply … helped by positive surprises in incoming data on demand and continued OPEC+ restraint,” Barclays (LON:) said in a note.

“But we expect the pace of price recovery to slow down along with rebalancing,” it said.

However, fears have grown that a second wave of Covid-19 cases in the U.S. will hamper already fragile demand in the world’s largest consumer, resulting in a return to the oversupply which plagued the market earlier this year.

Additionally, U.S. crude stockpiles unexpectedly expanded last week to 538.1 million barrels, the Energy Information Administration reported Wednesday, the highest level in data compiled by Bloomberg since 1982. 

The increase underlines the difficulty facing OPEC and its allies in their efforts to balance the market.

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