Crude Oil Prices Dip on Profit-Taking After Strong Week By

© Reuters.

By Geoffrey Smith — Crude oil prices fell on Friday but stayed comfortably above $60 a barrel, the market apparently settling into a new range on the back of strong economic numbers from the U.S. and China this week.

China’s gross domestic product grew by a record 18.3% year-on-year in the first quarter, a number that was vastly inflated by the comprehensive shutdown of the economy last year in the first wave of the pandemic. In quarter-on-quarter terms, the figures were less impressive, with GDP rising only 0.6% – less than expected. Even so, retail sales and fixed asset investment both performed strongly in March. 

The numbers came a day after U.S. retail sales data for March, which showed a wholesale lack of restraint by American households as the latest round of stimulus checks landed in accounts across the country.  Jobless claims data and, earlier Friday, housing starts and building permit numbers for March have also underpinned confidence in an improving outlook for oil demand. 

“Stimulus measures, amounting to $16 trillion according to IMF, account for 15% of global GDP, supporting the global economy and thus the oil demand recovery,” said analysts at Petrologica in a weekly briefing. “There remains downside risk to demand from virus mutations, though there is potential upside if forecasters are underestimating the level of pent up demand.”

By 11:45 AM ET (1545 GMT),  futures were down 0,5% at $63.14 a barrel, while futures, the global benchmark, were down 0.2% at $62.81 a barrel.  The declines amounted to little more than profit-taking at the end of a week when both markets have risen nearly 5%.

Prices have traded consistently above $60 since OPEC and the International Energy Agency revised up their forecasts for world demand this year in their respective monthly reports this week. The market has – largely – shrugged off evidence that the pandemic will continue to weigh noticeably on demand in much of the rest of the world outside the two largest economies. Data out of India earlier Friday showed that demand for gasoline, jet fuel and liquefied petroleum gas all slumped in the first half of April under the weight of spreading lockdowns to rein in rampant infection rates. Gasoline demand fell 5% and diesel demand fell 3 percent from March, according to Argus Media.

India, the world’s second-biggest net importer of oil, reported 217,000 new cases of Covid-19 on Thursday, a new record high. 

Later Friday, the Commodity Futures Trading Commission will issue its weekly update on , while the weekly rig count is due at 1 PM ET.

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