Oil prices recover after worst collapse

Oil prices recover after worst collapse                                                                                                                                                                                                                         

Budrigantrade.com - As concerns over rising Covid-19 cases and the potential for additional supply weigh, crude oil prices edged higher on Friday, rebounding somewhat from overnight losses but still on track for their worst week since mid-March.

U.S. crude futures were up 0.4 percent at $71.92 a barrel by 9:30 AM ET (1330 GMT), while the Brent contract was up 0.3 percent at $73.66.

At $2.2545 a gallon, U.S. Gasoline RBOB Futures were up 0.2%.

The Nymex contract is down 3.5% over the week and the Brent contract is down 2.4%, indicating that the crude market is on track for a second consecutive weekly decline in spite of these gains.

The rise in cases of Covid-19, mostly in southeast Asia, caused by the highly transmissible delta variant has put pressure on the market. This has led to new mobility restrictions from the government and the possibility of a hit to growth expectations.

Goldman Sachs (NYSE: GS) and the Bank of Japan both downgraded their real GDP forecasts for 2021 earlier on Friday, now anticipating growth of 3.8%, down from 4.0% in April. GS) cited the Covid-19 resurgence in its 2021 growth projections for the majority of the region's nations.

Reports that Saudi Arabia and the United Arab Emirates have settled their dispute pushed prices lower. This could lead to OPEC+, a group of top producers, expanding their production for the global market.

According to Bloomberg, the United Arab Emirates will now support a proposal from Saudi Arabia to extend the duration of the OPEC+ cuts agreement until December 2022. The UAE has been granted its desired new baseline for its production cuts, which is 3.65 million barrels per day.

Even though this would bring additional crude to the global market, it would also put an end to the supply-level uncertainty that has plagued the industry recently, especially given that most bodies anticipate a tighter market in the coming months.

In a note, analysts at ING stated, "Obviously, there would need to be another meeting before we can see an agreement between all members."

The data from the Baker Hughes drilling rig and the weekly commitments of traders from the Commodity Futures Trading Commission will be examined by traders later on Friday for clues regarding the positioning of the market and future U.S. supply.

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