By Adedapo Adesanya
Crude oil jumped more than 2 per cent on Friday, making a swift recovery from the previous’ day plunge as the market focused on what next after the Colonial Pipeline restarted its entire pipeline system returning supply to the market.
The Brent and West Texas Intermediate (WTI) futures had lost more than 3 per cent on Thursday after the pipeline system feeding more some crucial US states began deliveries in all of its markets. This halted the rally that had lifted crude to an eight-week high earlier in the week.
But on Friday, the Brent rose by 2.48 per cent or $1.66 to trade at $68.71 per barrel, while the WTI jumped by 2.43 per cent or $1.55 to sell at $65.37 per barrel.
Another factor that helped the commodity rise yesterday was a weaker dollar after the US Federal Reserve officials said there would be no imminent move to tighten monetary policy in the world’s biggest economy. Oil is priced in dollars, a weaker greenback makes the commodity cheaper for holders of other currencies, potentially spurring demand.
The market also saw a positive even as US retail sales unexpectedly stalled in April as the boost from stimulus checks disappeared, however, there are expectations that this will change in the coming months amid record savings and a reopening economy.
The market also has to deal with fact that excess oil inventories of the past year have been all but depleted, and a strong demand rebound in the second half this year could lead to even sharper stock draws, according to the International Energy Agency (IEA) said, keeping an upbeat forecast of global oil demand despite the weaker-than-expected first half of 2021.
Meanwhile, oil prices continue to be pressured from surging coronavirus cases in India as well as worries that the highly transmissible variant first detected there is spreading to other countries including Nigeria.
India on Friday reported 343,144 new coronavirus cases, taking its overall tally past the 24-million mark, while deaths from COVID-19 rose by 4,000 again.
The coronavirus situation in India keeps capping gains as the country, the third-largest consumer of oil may find itself needing less oil with cases threatening to throw the South Asian nation into a full-fledged lockdown.