Oil posted its biggest monthly advance on record, just a few weeks after prices made a dramatic plunge below zero.
Crude surged about 88 percent this month, with US futures on Friday rising above US$35 a barrel for the first time since March, driven by massive supply curbs by producers across the world.
Still, prices are well below levels at the start of the year and demand that was crushed by the COVID-19 pandemic might need to show a sustained improvement for the rally to extend further.
For now, the outlook for consumption looks bleak, although it is on the mend. While virus-related lockdowns are easing, demand is not yet roaring back in the US. Fuel sales that were clobbered in European nations, such as Spain and Italy, would take time to recover.
The number of rigs drilling for oil in the US fell for the 11th week, stemming the massive glut of crude that flooded the market. Yet there is a risk that oil’s advance could tempt producers to turn on their taps again.
“At the end of the day, what is driving everything is fuel demand,” said Tom O’Connor, senior director of petroleum markets at global consultancy ICF.
US crude futures fluctuated on Friday as US Federal Reserve Chairman Jerome Powell defended aggressive action to shield the economy as the pandemic took hold.
Prices surged at the close, with West Texas Intermediate (WTI) crude settling 5.3 percent higher at US$35.49 a barrel, after falling as much as 4 percent earlier in the day. The contract is up 4.6 percent for the week.
Futures posted the biggest monthly jump in data going back to 1983.
Brent crude for July delivery, which expired on Friday, rose US$0.04 to US$35.33, closing below WTI for the first time since 2016. The contract fell 1 percent for the week.
The global benchmark has rallied almost 40 percent this month.
The more active August contract rose 5 percent to settle at US$37.84 a barrel.
GOLD RUSH
The scramble to jump on one of the hottest gold trades in years — by shipping bullion to New York — has sparked what might be one of the largest-ever physical transfers of the metal.
“The flows into New York are unprecedented,” said Allan Finn, global commodities director at logistics and security provider Malca-Amit.
Gold futures on Friday settled up 1.4 percent at US$1,751.70 an ounce on the Comex, up 1 percent for the week.
Gold flooded into the US in the past few months as traders rushed to profit from an arbitrage caused by dislocations in the market triggered by the pandemic.
Since late March, about 550 tons (499 metric tonnes) of gold — worth US$30 billion at today’s price and roughly equal to global mine output in the period — have been added to Comex stockpiles.
Additional reporting by Reuters
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