By Gina Lee
Investing.com – Oil was up Friday morning in Asia, despite persistent fuel demand concerns and a strengthening dollar remaining as challenges to be overcome.
Brent oil futures jumped 1.67% to $63.80 by 9:50 PM ET (1:50 AM GMT) and WTI futures were up 0.75% to $60.45. Both Brent and WTI futures held above the $60 mark, however.
Investors triggered a sudden sell-off on Thursday over a perfect storm of negative factors. Inflation concerns pushing Treasury yields upwards saw the dollar edge up on Friday, making raw materials priced in the U.S. currency comparatively more expensive.
France and Italy are among the countries batting a third wave of COVID-19 cases, and there are emerging signs of declining fuel demand in Asia as well. Commodity trading advisors unwinding some long positions, as daily moves of more than 3% can trigger funds to quickly unload, could be another potential contributor to the selloff.
Another concern is the recent, further signs of weakness in WTI’s prompt time spread, which has widened to 8 cents a barrel after flipping to a narrow contango at the end of the previous week. Although Brent remains in backwardation, it has narrowed to 22 cents.
The International Energy Agency also warned earlier in the week that oil markets are not on the verge of a new super-cycle as supplies remain plentiful.
Despite its woes, the black liquid has seen prices remain more than 20% in 2021 as optimism for economic recovery from COVID-19 remains strong, thanks to the U.S.’ $1.9 trillion stimulus package, which was signed into law earlier in the month.
The Organization of Petroleum Exporting Countries and its allies (OPEC+)’s decision, also earlier in the month, to extend supply curbs into April also helped buoy prices.
Meanwhile, the European Medicines Agency (EMA) on Thursday endorsed the AstraZeneca PLC (LON:AZN)/University of Oxford COVID-19 vaccine, after several countries suspended its usage over concerns about potential side effects. The decision raised hopes that the global COVID-19 vaccine rollout can get back on track, with Germany, France, and other European nations planning to resume using the vaccine after the EMA’s endorsement.