Economy

Oil prices recover from weekly losses with demand rise

Driving season supports uptick in oil consumption and aids price recovery

Ovunc Kutlu   | 26.06.2020
Oil prices recover from weekly losses with demand rise

ANKARA

Crude oil prices were heading Friday for almost a full recovery from losses earlier in the week, thanks to rising oil demand around the world, although worries over a second virus wave and oversupply concerns still pose potential risks. 

International benchmark Brent crude was trading at $41.23 per barrel at 1200 GMT on Friday for a weekly decrease of 1.2% after it opened Monday at $41.74 a barrel.

American benchmark West Texas Intermediate was at $38.61 a barrel at the same time for a weekly decline of 1.4% after the starting the week at $39.18 per barrel.

Both benchmarks plummeted more than 5% on Wednesday as US crude oil production posted its first weekly increase after thirteen consecutive weeks of declines.

US crude oil production increased by 501,000 barrels per day (bpd) for the week ending June 19, its first weekly rise since the week ending March 13, according to data from Energy Information Administration (EIA) on Wednesday.

The other factor pushing crude prices lower was another increase in US commercial crude oil inventories, by 1.4 million barrels for the week ending June 19, much higher than the market estimate of a 0.3 million barrel increase.

Both increases in US crude oil production and inventories have spurred fears that the glut of global supply will be hard to eliminate in the second half of 2020 unless demand picks up.

On the demand side, oil prices posted more than 1.8% gains on Thursday and have continued their increase on Friday as news reports suggest that global oil consumption is picking up with the start of the summer season.

Vehicle traffic volumes are reported to have escalated in major countries throughout Asia, Europe and North America as the driving season kicks off.

However, the possibility of a second wave of the novel coronavirus (COVID-19) continues to concern investors over the potential negative impact on economic activities and overall oil consumption worldwide.

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