Oil declined as a recent rally in equities and commodities paused. Futures in New York dropped 1.1% on Friday as raw materials cooled from a scorching rally, while the dollar climbed making commodities priced in the currency less attractive. Prices remain on track for a weekly gain after topping $65 a barrel on Thursday for the first time since mid-March.

Oil heading for weekly gain amid bullish optimism

Travel across China is expected to pick up over an extended Labor Day holiday. Meanwhile major U.S. cities are moving to fully reopen and much of Wall Street remains bullish about consumption over the coming months. Goldman Sachs Group Inc. this week said demand could post a record jump as vaccination rates increase. “The near-term outlook is still bullish for oil,” said Stephen Brennock, an analyst at PVM Oil Associates. “India’s Covid woes are the exception rather than the rule.”

PRICES
  • West Texas Intermediate fell 69 cents to $64.32 a barrel at 10:14 a.m. London time
  • Brent for June settlement, which expires Friday lost 0.8% to $68.02
    • July contract -53c to $67.52

The short-term risks to the demand outlook are starting to show up in gauges of market health. The structure of the Middle Eastern Dubai benchmark flipped to a slight contango on Thursday, an indication that market tightness may be easing. The backwardation in the prompt timespread for Brent crude has also narrowed this week.