Meanwhile, the long-awaited OPEC meeting is set for Saturday: File Image/PixaBay
A stunning turnaround in U.S. job numbers supporting economists' earlier predictions of a V-shaped recovery in the wake of the coronavirus lockdown easements resulted in big gains for crude on Friday.
Prices were also supported by the Organization of the Petroleum Exporting Countries' (OPEC) decision to meet on Saturday instead of later next week to discuss whether to extend output cuts.
In stark contrast to the fear of analysts that the unemployment rate in the U.S. could reach nearly 20 percent in May due to the damage caused by the government imposed lockdowns, numbers released by that country's Labor Department indicated that in fact 2.5 million jobs had been added during that month - the single-biggest monthly gain in history.
Phil Flynn, senior market analyst, Price Futures Group Inc.
If we see jet fuel demand recover, that may give us hope
This in turn caused the U.S. unemployment rate to drop to 13.3 percent from 14.7 percent in April.
The numbers are still about triple what unemployment was prior to governments deciding to close businesses and order people to stay inside to slow the spread of the pandemic (actions which are coming under scrutiny given the relatively low infection and death rates of countries like Sweden that social distanced but kept businesses open); however, they represent significant progress in recovery.
Accordingly, Brent settled up $2.31, or 5.8 percent, at $42.30 per barrel, surging 19.2 percent on the week; West Texas Intermediate rose $2.14, or 5.7 percent, to $39.55 per barrel, rising 10.7 percent on the week.
Both benchmarks were headed for a sixth week of gains, and Phil Flynn, senior market analyst at Price Futures Group Inc., remarked that "If we see jet fuel demand recover, that may give us hope that we can look ahead to a day where these supplies can dwindle down" - a reference to American Airlines Group Inc. announcing increased U.S. flights in July.
While the numbers speak to the inherent resiliency of the U.S. economy, the damage caused by the shutdowns is extensive, and Bloomberg on Friday noted that demand recovery is uneven: "U.S. diesel demand fell to the lowest level in 21 years last week and, in Europe, profits from making the fuel are collapsing, threatening to limit demand for crude.
"On the other hand, China, the world's second-biggest oil user, is recovering quickly, with consumption back to pre-pandemic levels."
U.S. president Donald Trump on Friday pointed out that the only way to build demand is to continue re-opening the economy, and he echoed the sentiment of many critics that this is entirely feasible considering the significant progress made on coronavirus treatments and vaccines and the fact that infection rates in many parts of the globe are dropping.
Those wanting to accelerate the reopening process also point to the hypocrisy of elected leaders who on one hand threatened to extend lockdowns in the name of public health if anti lockdown protests continued but on the other have fully endorsed and even participated in the much larger George Floyd protests (as was the case with Michigan governor Gretchen Whitmer).
Further proving that politics and sentiment but not science was the driving force behind the coronavirus issue was Politico, which noted that former Centers for Disease Control and Prevention director Tom Frieden, who strongly warned against efforts to rush reopening, is now supportive of mass protests; also, a letter signed by 100 people in the public-health community first drafted by infectious-disease experts at the University of Washington, reached the conclusion that protests are okay.
The flip-flops seem to go both ways in the medical community: the World Health Organization now says governments around the world should encourage the use of face masks in public; earlier it stated only those experiencing virus symptoms should cover their face.