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UPDATE 5-Oil prices set for weekly gain despite India virus surge

05/07/2021 11:47
UPDATE 5-Oil prices set for weekly gain despite India virus surge

China's exports and services sector expand in April

April crude imports down 0.2% year on year in China

Coming Up: Baker Hughes' U.S. rig count at 1 p.m./1700 GMT

Adds quote, detail, updates prices, changes dateline; previous LONDON

By Devika Krishna Kumar

- Oil prices were little changed on Friday as the COVID-19 crisis in India worsened but prices were set for a weekly gain against the backdrop of optimism over a global economic recovery.

Brent crude futures LCOc1 were up 13 cents, or 0.2%, at $68.22 a barrel by 11:27 a.m. ET (1527 GMT) and U.S. West Texas Intermediate (WTI) crude CLc1 rose by 9 cents, or 0.1%, to $64.80.

Both Brent and WTI are on track for second consecutive weekly gains as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.

"Oil prices might still have a positive second consecutive week, but it is nothing to get energy traders excited that oil will break away from its tightening trading range. Oil's short-term outlook remains very mixed," Edward Moya, senior market analyst at OANDA said.

In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity. nL1N2MU04N nZRN001XGL

However, crude imports by the world's biggest buyer fell 0.2% in April from a year earlier to 40.36 million tonnes, or 9.82 million barrels per day (bpd), the lowest since December. nL1N2MU053

The recovery in oil demand, however, has been uneven as surging COVID-19 cases in India reduce fuel consumption in the world's third-largest oil importer and consumer. nL1N2MO08YnL1N2MN034

India on Friday reported a record daily rise in coronavirus cases of 414,188, while deaths from COVID-19 swelled by 3,915, according to health ministry data. nFWN2MT1U3

"Brent came within a whisker of breaking past $70 a barrel this week but failed at the final hurdle as demand uncertainty dragged on prices," said Stephen Brennock at oil brokerage PVM.

The resurgence of COVID-19 in countries such as India, Japan and Thailand is hindering gasoline demand recovery, energy consultancy FGE said in a client note, though some of the lost demand has been offset by countries such as China, where recent Labour Day holiday travel surpassed 2019 levels.

"Gasoline demand in the U.S. and parts of Europe is faring relatively well," FGE said.

"Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season."

In the United States, job growth unexpectedly slowed in April, likely restrained by worker shortages that have left businesses scrambling to meet booming demand as the economy reopens. nL1N2MT2XD

The U.S. oil rig count, an early indicator of future output, from energy services firm Baker Hughes will be released after 1 p.m. ET. Since hitting a record low in August, the number of drilling rigs have been growing modestly along with the recovery in oil prices. RIG/U

(Additional reporting by Ahmad Ghaddar in London, Florence Tan in Singaore
Editing by Marguerita Choy and Louise Heavens)

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