Oil settles down but maintains bullish sentiment of recovery

oil prices

Oil prices settled down slightly this Friday, but maintains a bullish sentiment of recovery, as China and the United States strong economic performance offset concerns about a new Covid-19 wave to disrupt major economies.

Firstly, Brent crude settle down 17 cents, 0,3% at $66,77 a barrel. The global benchmark finished the trading session up in 6% on the week after rising in the past four sessions.

On the other hand, the U.S. West Texas Intermediate (WTI) crude plunged a bit further, 33 cents, or 0,5%; and settled at $63,13.

Moreover, according to Reuters, China’s gross domestic product jumped 18,3% year-on-year; which sparked a peak in U.S. retail sales, and a drop in unemployment.

Furthermore, the economic relief pushed by the Joe Biden administration had also an uplift for the energy patch. “Strong economic data, spurred by the Biden $1,400 stimulus check, is a huge positive development for the energy patch,” said Bob Yawger, director of energy futures at Mizuho, quoted by Reuters.

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oil production gulf of mexico

Oil production to peak in the Gulf of Mexico

In addition, during this week, both the International Energy Agency and the Organization of Petroleum Exporting Countries increased their forecast for oil demand during 2021. Precisely, citing strong economic performance in certain economies as a crucial factor for it.

Those forecasts were backed by the one from the Energy Information Administration, about the oil production activity in the Gulf of Mexico, set to increase over 16% for the next two years.

In addition, this Wednesday government data showed an overall U.S. crude inventories drop of 5,9 million barrels; as refining activity is also picking up.

On the other hand, oil has recovered almost all of what it had lost when the covif-19 first stroke; up from the historic below zero levels. Production curtailments from OPEC and allies certainly helped on the recovery.

Finally, in the U.S.  the number of drilling rigs has risen to the highest level since April 2020; energy services firm Baker Hughes said this Friday.

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