By Geoffrey Smith
Investing.com -- Crude oil prices were generally higher in choppy early trading in the U.S. on Friday, after the Federal Reserve’s decision to close a loophole in U.S. bank regulations pushed the dollar higher, weighing on all commodities.
The news came at the end of a week in which sentiment towards crude has weakened markedly, as a fresh wave of lockdowns arrives in Europe and India, threatening to push back the expected recovery in global oil demand. Prices had fallen some 7% on Thursday.
“The correction showed how premature it has been for many to start dreaming of a 100-dollar barrel, when oil prices are only artificially supported by OPEC’s reduced supply, with a demand recovery facing still a number of obstacles,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen in emailed comments.
By 11:10 AM ET (1510 GMT), U.S. crude futures were up 0.9% at $60.56 a barrel, on course for a weekly drop of some 9%, their biggest weekly drop since October.
Brent crude futures were up 0.8% at $63.80 a barrel. Both markers had been trading significantly higher ahead of the Fed’s announcement.
U.S. Gasoline RBOB Futures, meanwhile, were down 0.6% at a three-week low of $1.9325 a gallon, also on course for a weekly loss of around 9%. U.S. gasoline demand continued to rise this week, with PayWithGasBuddy data showing a 4.9% rise on the week through Thursday. Thursday’s consumption levels were 1.8% above those on the last Thursday before the pandemic, according to GasBuddy analyst Patrick De Haan.
However, it’s the demand picture in Europe and India, both of which are home to new waves of Covid-19, that is pushing prices around. France put eight of its regions – including the ones around Paris and Nice – back into a stricter lockdown on Thursday, while new infections in Germany are at their highest since January. Switzerland announced on Friday that it will delay all outstanding plans to lift restrictions on economic and social life due to the last wave.
A brief uptick in overnight trading had occurred after reports of another strike on Saudi Arabian oil facilities by Iranian-backed Houthi rebels in Yemen. The spike unwound after Saudi Arabia’s energy ministry said that there had been no casualties and no impact on throughput at the target, Saudi Aramco’s refinery in Riyadh. Reports suggested a power generator and a storage tank had been hit by the drone strike.