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Oil futures ended higher Friday to score a seventh straight weekly climb, as traders remained optimistic about vaccine rollouts and prospects for U.S. lawmakers to reach a deal on an economic relief package.
The move lifted prices to their highest settlement since late February.
“Congress appears to be closer to passing a stimulus bill that could boost U.S. GDP, which leads to increased oil consumption,” said Rob Thummel, portfolio manager at Kansas-based investment company, Tortoise.
Meanwhile, “COVID-19 vaccinations have begun, providing a path toward increased demand for oil-related products such as gasoline as the global economy rebounds,” he told MarketWatch.
Adding further support to prices, a lower oil-demand forecast from the Organization of the Petroleum Countries this week makes it unlikely that OPEC and its allies will significantly increase global supply when it meets in early January, Thummel said.
West Texas Intermediate crude for January delivery CL.1, +1.30% CLF21, +1.30% rose 74 cents, or 1.5%, to settle at $49.10 a barrel on the New York Mercantile Exchange — the highest front-month contract finish since Feb. 25, according to Dow Jones Market Data. The January contract expires at the end of Monday’s session.
February Brent crude BRN00, -0.13% BRNG21, -0.13%, the global benchmark, tacked on 76 cents, or 1.5%, to $52.26 a barrel on ICE Futures Europe, for the highest settlement since Feb. 26.
The U.S. oil benchmark WTI, based on the front-month contract, logged a 5.4% weekly rise, while Brent climbed 4.6% over the same stretch. Both benchmarks have posted increases for seven weeks straight and for Brent, that was the longest winning streak since the week ended Oct. 8, 2010.
Read: Why oil prices aren’t expected to see a quick recovery from a more than 20% loss in 2020
Global risk assets “are heading into year-end in jubilant mood with the optimism of a deal on the U.S. stimulus package as well as recovery hopes on the back of vaccine rollout, and are once again ignoring virus-linked lockdowns,” said Fawad Razaqzada, analyst at ThinkMarkets, in a note.
“There’s hope that the global economy will suddenly kick-start as confidence returns,” he said. “This is why value stocks, crude oil and industrial metals have all rallied in recent weeks and I expect that trend to continue, unless something fundamentally changes or a major risk-off event occurs.”
U.S. congressional leaders continued to negotiate toward a $900 billion package of economic relief that would send checks to households, extend unemployment benefits and provide aid to small businesses. At the same time, a midnight Friday deadline to complete a bill funding government operations loomed, leaving the possibility of a government shutdown in the midst of a worsening pandemic.
Meanwhile, an independent advisory committee on Thursday voted 20-0-1 that the benefits of Moderna Inc.’s MRNA, -2.62% COVID-19 vaccine candidate outweigh the risks, a recommendation that sets the stage for a likely Food and U.S. Drug Administration authorization. Inoculations using the vaccine developed by Pfizer Inc. PFE, -0.92% and BioNTech SE BNTX, -2.06% began earlier this week.
Analysts said evidence of strong physical demand continued to underpin the market.
“Although sobering coronavirus case counts in many countries may be tempering optimism among some market participants, this has so far not been enough to knock key physical markets down a notch,” wrote analysts at JBC Energy. “In the North Sea, the physical market has been helped higher as floating storage volumes have begun shifting lower.”
Read: How a weaker dollar could help fuel a commodities boom in 2021
Traders were likely to keep an eye on production in the U.S., however. Data from Baker Hughes BKR, -1.49% on Friday showed that the number of active domestic rigs drilling for oil rose by 5 to 263 this week, marking a fourth consecutive weekly climb — raising the potential for higher oil production.
Among the oil products traded on Nymex, January gasoline RBF21, +0.36% rose 0.5% to $1.3956 a gallon, settling up 6.7% for the week. January heating oil HOF21, +0.88% added 1.2% to $1.513 a gallon, for 5.3% rise on the week.
Read: Why a COVID-19 relief package and vaccine won’t be enough to boost U.S. gasoline demand
Natural gas for January delivery NGF21, +2.77% settled at $2.70 per million British thermal units, up 2.4% on Friday, for a weekly rise of 4.2%.
Read: Natural-gas prices look to end the year higher for the first time since 2016
