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Oil headed for a weekly gain — after topping $65 a barrel on Thursday — as signs of strengthening demand from the U.S. to China stoked optimism the demand recovery from the pandemic is accelerating.

Futures in New York edged lower Friday, but are up more than 4% this week. Major American cities are moving to fully reopen, travel across China over an extended holiday that starts Saturday is expected to reach a record, and sales of transport fuels in the U.K. are climbing. Big oil companies are also starting to reap the rewards of the recovery.

There’s been a raft of bullish calls on the market this week, with the OPEC+ alliance raising its consumption estimates for this year and Goldman Sachs Group Inc (NYSE:GS). predicting oil demand will post a record jump as vaccination rates increase. The coronavirus is still looming over the market, however, with a resurgence in regions such as India clouding the near-term outlook.

Still, commodities across the board including copper have rallied in recent sessions, driven by optimism on the recovery in key economies and tightening supplies of raw materials. That’s pushed the Bloomberg Spot Commodity Index to the highest level since 2012 this week.

Europe’s largest oil and gas companies saw their combined cash flow rebound to the highest since late 2019 in first-quarter earnings. Some U.S. producers are also restoring dividends as they rebound from the virus-driven crash.

The short-term risks to the demand outlook are showing up in gauges of market health, however. 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 has also narrowed this week.

©2021 Bloomberg L.P.

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