(Bloomberg) -- Oil rose to trade near $60 a barrel -- but was headed for a weekly drop -- as Saudi Arabia defended the OPEC+ plan to increase output and said the alliance was nimble enough to change course if necessary.
West Texas Intermediate added 0.4% after a small decline Thursday, paring its weekly loss to less than 3%. Saudi Energy Minister Prince Abdulaziz bin Salman said there’s nothing yet in the market “that disturbs us”. The group will continue to meet monthly and it can adjust plans, he said in an interview.
Crude has been hemmed into a narrow range around $60 a barrel since mid-March as investors weigh the roll-out of vaccines and increased economic activity against Covid-19 flare-ups in some countries. The Organization of Petroleum Exporting Countries and its allies agreed last week to reintroduce more than 2 million barrels a day of supply over the coming months.
There was further support for financial markets from Federal Reserve Chair Jerome Powell, who pledged that the U.S. central bank will go on providing the economy with the support it needs to bounce back fully from the pandemic. So far, the recovery remained incomplete, Powell told a virtual panel.
California provided further evidence that the lifting of anti-virus curbs is helping to stoke energy consumption, even as outbreaks worsen in Brazil, India, and parts of Europe. Gasoline prices in the most populous U.S. state are nearing $4 a gallon, a level that was last seen in November 2019.
The plan from OPEC+ envisages a phased return of production over the three months to July, with the alliance easing collective curbs and Saudi Arabia phasing out an additional, unilateral cut. The cartel will update its global supply-and-demand forecasts in a monthly report next Tuesday.
Brent’s underlying market structure has shown signs of strength. The global benchmark’s prompt timespread was 49 cents a barrel in backwardation on Thursday. That’s a bullish pattern, with near-term prices trading above those further out. That’s up from 6 cents at the beginning of last week.
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