Crude Oil Drifts Higher; Weekly Gains Look Likely

© Reuters.

AiVIF.com -- Crude oil prices edged higher Friday, set for a second straight weekly gain but below recent highs following disappointing U.S. growth data and Covid worries.

By 10:20 AM ET (1420 GMT), U.S. crude futures traded 0.1% higher at $73.73 a barrel, while the Brent contract rose 0.1% to $75.18.

U.S. Gasoline RBOB Futures were up 0.1% at $2.3265 a gallon.

Both benchmark contracts are set for gains of around 2% over the week, helped by signs of tight crude supplies at the world’s largest consumer, the U.S. Both the American Petroleum Institute and the U.S. Energy Information Administration reported a draw in U.S. crude oil supplies, with crude stocks at Cushing at their lowest since January 2020.

That said, data released Thursday showed U.S. gross domestic product increased at a 6.5% annualized rate in the last quarter, a healthy gain but substantially less than the 8.5% growth expected. 

Additionally, while Federal Reserve Chairman Jerome Powell indicated following the central bank’s latest meeting earlier this week that the U.S. economy has "learned to handle" the coronavirus, this belief could be tested by a fresh wave of infections as schools reopen.

The Washington Post reported that the U.S. Centers for Disease Control and Prevention has described the delta variant of the coronavirus as being as transmissible as chickenpox and cautioned it could cause severe disease, citing an internal CDC document.

“The wax and wane of COVID-19 waves will have more of an influence on sentiment rather than supply and demand fundamentals during the rest of the year, as we do not expect politicians to impose hard and broad-based lockdown measures anymore," said Julius Baer analyst Carsten Menke, in a Reuters report.

In corporate news, both Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) indicated in their second-quarter earnings reports that they were reviving share buybacks that were suspended more than a year ago, signaling confidence that the current healthy profits on the back of high oil prices can be sustained.

Elsewhere, the Baker Hughes rig count and the Commodity Futures Trading Commission’s report on the commitments of traders round out the week.