Oil prices bounced back after dropping about 3% a day earlier as coronavirus cases remained high in major oil consumer India and as a key fuel pipeline in the United States resumed operations after being shut due to a cyber attack.
West Texas Intermediate (WTI) was climbed $1.35, or 2.12%, at $65.13 a barrel. Both prices are heading for their first weekly loss in three weeks.
“The commodity supercycle rally just hit a hard stop and the energy market doesn’t know what to make of Wall Street’s fixation over inflation and the slow flattening of the curve in India,” said Edward Moya, senior market analyst at OANDA. India is the world’s third-biggest oil consumer.
“The crude demand story is still upbeat for the second half of the year and that should prevent any significant dips in oil prices,” he added.
Prices came under pressure as a broader surge in commodity prices, labor shortage and much stronger-than-expected U.S. consumer prices data this week stoked inflation concerns that could force the Federal Reserve to raise interest rates.
Raising rates typically boosts the U.S. dollar, which in turn pressures oil prices because it makes crude more expensive for holders of other currencies.
India on Friday reported 343,144 new coronavirus cases over the past 24 hours, taking its overall caseload past the 24 million mark, while deaths from COVID-19 rose by 4,000.
In the United States, President Joe Biden reassured motorists that fuel supplies should start returning to normal this weekend, even as more filling stations ran out of gasoline across the Southeast nearly a week after a cyber attack on the nation’s top fuel pipeline.
Colonial Pipeline said late on Thursday it had restarted its entire pipeline system and had begun deliveries in all of its markets.
Traders were also watching the situation in the Middle East after Israel fired artillery and mounted more air strikes on Friday against Palestinian militants in the Gaza Strip amid constant rocket fire deep into Israel’s commercial centre.