Perth: Oil fell below $62 a barrel on Friday amid lingering scepticism over the pace of a global economic recovery, but prices are on track to snap four straight weeks of decline to post a weekly gain.
Helped by a rally in the equities markets and some positive economic data, oil is on course to rise about 2.8% this week, partially reversing last week’s drop of 10.3%, which was the highest weekly decline since early February.
US crude oil for September delivery fell 42 cents to $61.60 a barrel by 12:06pm, London Brent crude fell 42 cents to $63.33 a barrel.
“Sentiments on oil are split between those who believe a recovery is on its way and therefore prices should climb higher, and those who are looking at the supply-demand fundamentals and believe that the market is still very weak,” said Victor Shum, a Singapore-based analyst at Purvin & Gertz.
Oil’s gains on Thursday were helped by a rise on Wall Street following more upbeat corporate earnings and a report that showed strong economic growth in China, the world’s second biggest consumer of energy.
The number of Americans filing for jobless benefits fell to the lowest level since January last week, a decline linked to upheaval in the auto industry, while a key regional manufacturing index slipped more than expected in July, reports showed on Thursday.
In China, refiners in the world’s No.2 energy consumer boosted production by 6% in June to a record high after a rise in domestic motor fuel prices aided margins, although higher inventories and rising exports suggested domestic demand was lagging.
Oil prices remain down nearly $10 since early July - partially reversing last quarter’s 40% surge - amid lingering concerns about global energy demand, which has been contracting for the first time in a quarter century under the weight of the economic recession.
US government data this week showing a swelling in gasoline stockpiles in the week of July 10 despite the 4 July Independence Day holiday when the summer driving season typically peaks, remains a stark reminder for investors that demand in the world’s top energy consumer is still tepid at best.
Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said on Thursday the worst of the turmoil had passed, but emphasized the US would still need a second fiscal stimulus, possibly by the end of this year, as the unemployment rate quickly approaches 10%.
In Nigeria, France’s Total has declared force majeure on cargoes of Nigerian Amenam crude oil loading from the middle of July due to technical problems.
Economic data due out later on Friday include the US housing building permits for June and the US ECRI weekly index, which will be keenly watched by investors to gauge how the economy was faring.