Oil declined amid a broader drop in equities and commodities, although it remains on track for a weekly gain after signs of strengthening demand stoked optimism price could surge above $70 a barrel next month.
Traders say the recovery of demand from the pandemic is accelerating.
Futures in New York dropped 0.6% on Friday as raw materials took a breather from a scorching rally.
WTI closed above $65 a barrel on Thursday for the first time since mid-March on prospects for higher fuel consumptionfrom the U.S., China and the U.K.
A resurgent virus, especially in India, is still looming over the near-term demand outlook, however.
“This week saw an avalanche of strong data and reassuring developments in the U.S, but that may have buried the rising global risk of more transmissible Covid variants,” said Vandana Hari, the founder of energy consultant Vanda Insights in Singapore. “At six-week highs, crude was ripe for a breather.”
The short-term risks to the demand outlook are starting to show up in gauges of market health.
The structure of the Middle Eastern Dubai benchmark flipped to a slight contango on Thursday, an indication that market tightness may be easing.
The backwardation in the prompt timespread for Brent crude has also narrowed this week.
There was a raft of bullish calls on the outlook this week, with the OPEC+coalition raising its consumption estimates for this year and Goldman Sachs Group Inc. predicting oil demand will post a record jump as vaccination rates increase.
Major U.S. cities are moving to fully reopen, while travel across China over an extended holiday that starts Saturday is expected to hit a record.
