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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 towards $66 a barrel after advancing 2.4% on Friday. The US and China with parts of Europe are rebounding strongly from the pandemic as a vaccination drive accelerates. The prompt time spread for global benchmark Brent crude has also started widening again in a bullish backwardation structure, signalling a tightening market.
Meanwhile, petrol stations are in the process of returning to normal after the restart of Colonial Pipelin after a cyberattack halted flows, though fuel disruptions may still be seen for weeks in parts of the US 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 wild card is the prospect of more crude flows from Iran as the nation seeks to revive a nuclear deal and free itself of US sanctions, but talks are ongoing and progress on a solution remains uncertain
The prompt time spread for Brent was 34c in backwardation — in which near-dated contracts are more expensive than later-dated ones — compared with 23c a week earlier. It narrowed to 17c on Thursday.
