Oil edged higher on Friday, with a weaker US dollar overshadowing signs of a slowing global economic recovery.
US crude futures flipped between gains and losses during the day’s session, eventually closing higher and posting a 1.7 percent increase for the week.
The US dollar weakening to the lowest since January boosted the appeal of commodities priced in the greenback, while fears over a demand slowdown in the wake of growing inventories and a rising COVID-19 case count were put on the backburner.
“The market’s caught between two strong and opposing forces,” said Bill O’Grady, executive vice president at Confluence Investment Management LLC in St Louis. “On the one side, you’ve got a storage overhang that is persistent, on the other hand, you’ve got a weakening dollar, you’ve got negative real interest rates and these factors tend to be bullish for commodities in general and crude in particular.”
West Texas Intermediate crude for July delivery added 0.3 percent to US$41.21 a barrel, up 1.7 percent for the week.
Brent crude for August delivery on Friday edged up 0.07 percent to settle at 43.34 a barrel, up 0.5 percent for the week.
US crude’s recovery from negative territory in April has largely stalled, as futures trade range-bound this month amid signs the pandemic is flaring up again around the world.
In the US, virus cases surpassed 4 million, in South Africa, infections doubled over the past 17 days and the virus count in Brazil sits above 2 million.
Schlumberger Ltd said that new waves of COVID-19 could derail the nascent recovery in global energy demand.
Yet, crude markets have gathered steady support from the weaker US dollar, which is headed for its worst month since the start of 2018, as investors line up to short the greenback.
Reports of eurozone growth also boosted sentiment and helped push oil higher.
China ordered the US to close its consulate in Chengdu, following through on retaliation threats after the US administration’s decision to shut down the Chinese mission in Houston, Texas.
Additional reporting by staff writer
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