Oil futures were under pressure for a second straight session Friday after snapping lengthy winning streaks, but remained on track for weekly gains as traders remain upbeat about demand prospects as U.S. lawmakers make progress toward another large round of relief spending and global vaccine rollouts quell demand fears.
West Texas Intermediate crude for March delivery fell 45 cents, or 0.8%, to $57.79 a barrel on the New York Mercantile Exchange, but was on track for a 1.6% weekly rise. April Brent crude, the global benchmark, was off 39 cents, or 0.6%, at $60.75 a barrel on ICE Futures Europe, leaving it up 2.4% for the week.
WTI snapped an eight day winning streak Thursday, while Brent ended a nine-day run of gains after the Organization of the Petroleum Exporting Countries, or OPEC, trimmed its forecast for 2021 oil-demand growth in its monthly report.
But analysts said optimism over prospects for a broader reopening of the global economy remains a source of underlying support. On the supply side, meanwhile, OPEC and its allies, a group known as OPEC+, have stuck closely to output curbs, enhanced by Saudi Arabia’s decision to unilaterally cut production by 1 million barrels a day in February and March.
The oil rally, however, could make for thornier discussions among producers in coming months amid fears that outside producers, including U.S. shale operators, will boost production and potentially take away market share.
“The call within OPEC+ to increase oil production could…grow rapidly,” said Hans Van Cleef, senior energy economist at ABN Amro, in a note.
“This is partly to protect their market share and to protect it from the Americans, but also to be able to meet their own financial needs. After all, many of the OPEC+ countries are in financial dire straits and some extra oil production — certainly at the current price — could bring some relief,” he said.
It wouldn’t be a surprise to see “verbal interventions” from OPEC+ members as early as March 3 and 4 when they meet again to agree on output levels for April and beyond, he said.