Oil prices were set early on Friday for their first weekly gain since early January as the market shook off the coronavirus panic and hoped for a Chinese stimulus in case the virus outbreak considerably slows down the economy.
Both benchmarks were on track for their fourth consecutive session of gains, which, if realized at close of Friday trade, would be the longest streak of oil price gains so far this year, according to Bloomberg estimates.
Earlier this week, the latest crude oil price rally was nipped in the bud on Wednesday night by the news that 15,000 new coronavirus cases had been diagnosed in the Chinese province of Hubei, as health authorities had changed their method of counting the cases, including “clinically diagnosed” patients to the total count. But oil prices recovered on Thursday morning.
Prices continued to rise early on Friday, snapping the streak of hefty sell-offs of the past two weeks, as factories across China re-open for business and the authorities signal that economic stimulus packages are on the way if the economic growth slows too much.
In addition, despite the fact that Chinese refiners have been cutting refinery rates because of depressed fuel demand across China due to the travel restrictions amid the virus outbreak, some independent Chinese refiners are said to have been buying a lot of crude oil cargoes recently.
Several Chinese independent refiners, commonly known as teapots, have returned to the oil market with purchases, traders familiar with the market told Bloomberg on Friday. According to those sources, the Chinese teapots are probably stocking up on cheap crude amid the low prices, in preparation of an expected surge in demand after the outbreak.
By Tsvetana Paraskova for Oilprice.com
Oil prices were supported by OPEC rhetoric on Friday, but the cartel is still awaiting Russia's answer.
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