Oil Set to resume weekly gains with demand recovery on track

Oil was poised to resume a run of weekly gains on signs consumption is picking up as economies emerge from lockdowns, despite many countries still struggling to bring the coronavirus under control.

Futures in New York edged above $39 a barrel Friday and are up around 8% this week. Top trading houses Vitol SA and Trafigura Group said global oil demand is recovering rapidly from its nadir in April, with Trafigura estimating it’s at 90% of pre-virus levels. Gasoline futures in the U.S. moved into backwardation for the first time in three months on Thursday, a bullish signal that indicates supplies are tightening as the summer driving season gets underway.

A potential resurgence of the virus is clouding the long-term outlook, however. Traffic in Beijing has plunged as authorities battle a fresh outbreak, while some U.S. states including Texas are still seeing record increases in cases.