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Oil prices crawl up on demand recovery, tempered by virus outbreaks

Published 06/26/2020, 08:18 AM
Updated 06/26/2020, 08:20 AM
© Reuters.
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By Sonali Paul
MELBOURNE, June 26 (Reuters) - Oil prices rose in early
trade on Friday, extending gains from the previous day on
optimism about recovering fuel demand worldwide, despite surges
in coronavirus infections in some U.S. states and indications of
a revival in U.S. crude production.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
gained 15 cents, or 0.4%, to $38.87 at 0009 GMT but were on
track for a slight drop for the week.
Brent crude LCOc1 futures rose 22 cents, or 0.5%, to
$41.27, but were also heading towards a decline for the week.
Analysts said satellite data showing strong pick-ups in
traffic in China, Europe and across the United States pointed to
a recovery in fuel demand.
Congestion in Shanghai in the past few weeks was higher than
in the same period last year, while in Moscow traffic was back
to last year's levels, data provided to Reuters by location
technology company TomTom showed. However, sentiment has been dented by fears a spike in
COVID-19 infections in southern U.S. states could stall the
demand recovery, especially as some of those states such Florida
and Texas, are among the biggest gasoline consumers.
"The risk of a fresh outbreak could hit the recovery in
demand," ANZ Research said in a note.
The prospect of increased U.S. crude production also kept a
lid on gains on Friday.
A survey of executives in the top U.S. oil and gas producing
region by the Dallas Federal Reserve Bank found more than a
third of executives who cut production expect to resume some
output by the end of June and another 20% would reverse shut-ins
in July. WTI would have to be between $36 and $41 a barrel to restore
production, nearly a third said in the survey. Another 27% said
prices would have to range between $41 and $45 per barrel.

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