Oil futures rose Friday and were on track for weekly gains, with optimism over potential vaccine treatments outweighing the threat posed by rising COVID-19 cases.
West Texas Intermediate crude for January delivery, the most actively traded contract, up 24 cents, or 0.6%, at $42.14 a barrel on the New York Mercantile Exchange. January Brent crude, the global benchmark, was up 40 cents, or 0.9%, at $44.60 a barrel on ICE Futures Europe.
Based on the most actively traded contracts, WTI is on track for a 5.1% weekly rise, while Brent is up 4.2%.
The physical market for crude has proven resilient, with Atlantic Basin crudes “clearing at an easier pace” despite rising European lockdowns, a surge in U.S. COVID cases that is expected to weigh on activity, a ramp-up in Libyan oil output and speculation around whether the Organization of the Petroleum Exporting Countries and its allies will extend current output curbs, noted Michael Tran, analyst at RBC Capital Markets, in a note.
The barrels are clearing to Asia, he said, “where demand has kicked into high gear,” with China a center for stability and India “fortifying” its domestic recovery.
“While investors are hesitant to short the oil market in the face of a vaccine, the physical market is showing signs of modest improvement, suggesting that crude prices are asymmetrically skewed to the upside,” he said.