Oil Posts Weekly Rebound From OPEC+ Dip as Fuels Show Strength

(Bloomberg) — Oil posted the largest weekly gain since April after OPEC+ clarified its plan to return some output to the market and fuel markets showed signs of strength.

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West Texas Intermediate settled above $78 a barrel, posting a 3.9% weekly advance. Crude made the bulk of its gains on Monday after traders “bought the dip” following last week’s selloff on OPEC+’s decision to possibly restore supply later this year. After the move sent prices slumping to four-month lows, the group stressed it could pause or reverse production changes if needed.

Refined products have also supported crude’s gains with signs of seasonal strength. Gasoline futures rose about 0.7% in New York this week, while Europe’s diesel market is signaling tighter conditions, with the fuel’s premium over crude reaching a two-month high. Earlier this week, aviation data showed flights returning to pre-pandemic levels.

Still, the overall outlook for crude darkened this week as the International Energy Agency curbed forecasts for consumption growth this year and warned of a “major surplus” over the longer term.

Crude prices have retreated about 10% from a peak reached in mid-April on concerns over China’s economic outlook and indications of rising supplies from the US and other parts of the Americas. Meanwhile, Federal Reserve officials this week penciled in only one interest-rate cut this year, cooling market sentiment.

China’s decades-long boom in oil processing could falter this year for the first time in data that extends back to 2004 — excluding a hit during the Covid pandemic — according to most market watchers surveyed by Bloomberg.

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