Crude oil pops 6% as demand shows signs of picking up

U.S. crude oil futures (CL1:COM) wrapped up a weekly gain of 19%, finding support from production cuts by major oil producers and early signs of a recovery in demand for crude with some business lockdowns globally being lifted.

July WTI settled+5.9%to $29.52/bbl, the highest for the most-active futures contract since mid-March; Brent+3.6%to $32.27/bbl.

"The fundamentals in the market are clearly improving," ING Research analysts say. "But we still believe that in the near term, the upside is limited given that we are still in a surplus environment ... There is plenty of inventory for the market to digest."

Analysts also say the structure change by the U.S. Oil Fund (USO+4.4%) - the biggest oil ETF - also has helped stabilize crude markets, although many want to see an uneventful expiration of the June futures next week before suggesting that the peak of the oil storage crisis has passed.

The June/July spread even switched briefly from contango to backwardation, a move Mizuho energy director Robert Yawger says "implies a lot of positive developments, all implying fundamentals are improving."

ETFs: USO, XLE, UCO, XOP, VDE, OIH, BGR, GUSH, ERX, BNO

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