Crude futures climbed 2.5% May 14, clawing back much of the previous session's losses amid a weakened US dollar and optimistic demand outlooks.
NYMEX June WTI was up $1.55 at $65.37/b, and ICE July Brent was $1.66 higher at $68.71/b.
Front-month ICE US Dollar futures were holding around 90.32, down from a May 13 close of 90.752 and on pace for its lowest close since May 11.
The weaker dollar comes as US Census Bureau data released May 14 showed US retail sales were unexpectedly flat in April, below expectations of a 0.8% increase and down sharply from a 10.7% surge in March.
The lackluster sales data, however, may have eased market concerns regarding US inflation, which Labor Department data released on May 12 showed had unexpectedly surged in April. Rising inflation could force the Federal Reserve to raise interest rates, a move that would tighten market liquidity and likely add headwinds to demand.
Adding further support to markets were newly bullish expectations of strong summer energy demand, analysts said.
NYMEX June RBOB settled up 3.13 cents at $2.1266/gal, and June ULSD climbed 3.53 cents to $2.0362/gal.
"The reopening trade is here to stay now that the CDC stated that fully vaccinated people did not need to wear face masks indoors or outdoors in most settings," OANDA senior market analyst Edward Moya said in a note. "The US is widely expected to have a very normal summer."
The US Centers for Disease Control on May 13 updated its guidance stating that fully vaccinated individuals no longer need to wear a mask or social distance both indoors and outside.
The US Energy Information Administration on May 11 raised its outlook for US gasoline demand by 100,000 b/d to 8.7 million b/d for 2021, citing a recent uptick in driving activity and an improved economic forecast.
However, the oil price rally was likely to be capped amid pressure from easing supply constraints on the US East Coast and concerns over a global oil demand recovery, analysts said.
Colonial Pipeline has resumed crude deliveries following the May 7 cyberattack, the company said in a statement May 13.
"We can now report that we have restarted our entire pipeline system and that product delivery has commenced to all markets we serve," the company said.
The pipeline is the primary artery for gasoline and refined products, delivering 2.5 million b/d, or 45%, of USAC supply of diesel, gasoline and jet fuel.
"Brent's renewed failure to exceed $70 is likely to have sparked selling by speculative market participants, especially as operation of the Colonial Pipeline is being ramped up again in the US, meaning that the impact of one key factor that has been driving oil prices in general in recent days is dwindling," Commerzbank energy analyst Carsten Fritz wrote in a Friday morning note.
Furthermore, the worsening COVID-19 crisis in India has weighed on the nation's energy consumption and continues to add uncertainty to the global demand recovery narrative.
India's No. 2 state-run refiner Bharat Petroleum has scaled down the combined runs at its two refineries at Kochi and Mumbai to around 80%-90%, adjusting for a fall in retail demand for oil products in South India due to the ongoing coronavirus pandemic, company officials said May 14.
In March, the combined run for both the refineries stood at 118%, compared with 116% in the year-ago month.
