Oil posted the biggest weekly gain since early March as signs emerged of a recovery from the pandemic gaining traction in the U.S. and China.
Futures in New York advanced 6.4% this week, despite eking out a small loss on Friday. On the heels of robust economic figures out of the U.S., data from China showed its gross domestic product climbed 18.3% in the first quarter from a year prior as consumer spending beat forecasts. In March, China's refiners processed about 20% more crude than a year earlier, pointing to the strength of the country's rebound.
JPMorgan Chase & Co. analysts brought forward their forecast for the global benchmark Brent hitting $70 a barrel again by four months to May, with a boost in U.S. demand likely bringing inventories for countries of the Organization for Economic Co-operation and Development in line sooner than expected.
"The world's two largest economies are starting to really shine, and despite difficulties in Europe, they're starting to get vaccinations going as well," said Edward Moya, senior market analyst at Oanda Corp. "Having Europe, China and the U.S. for the most part looking at a return to normalcy, that speaks wonders for the demand outlook, which is very supportive for higher prices."
Prices this week escaped the narrow trading range they had been in for nearly a month, with upbeat developments out of the world's two largest economies helping lift the outlook for demand. The International Energy Agency joined the world's major oil organizations in boosting its consumption forecasts earlier this week, with the IEA citing the improving situation in U.S. and China.
In Asia, a Chinese mega-refiner and some Japanese oil companies have been snapping up crude cargoes, boding well for the physical market. With Asian buying picking up, gauges of market strength have also climbed. Brent's nearest timespread was in a bullish backwardation of 48 cents a barrel on Friday, compared with as little as 37 cents on Wednesday.
"We're closing the gap on gasoline and jet fuel," said Peter McNally, global head for industrials, materials and energy at Third Bridge. "International travel is not coming back this summer, but as far as the two biggest markets go -- China and the U.S. -- it's encouraging."