Global benchmark Brent is set for its first weekly rise in three weeks on signs that global demand is picking up due to strong economic indicators from key consumers China and the United States.
Brent crude oil prices rose 39 cents, or 0.47%, to $83.66 a barrel by 06:03 GMT. West Texas Intermediate (WTI) crude oil futures rose 22 cents, or 0.28%, to $79.45 a barrel.
Brent futures are expected to rise approximately 1% every week, while WTI futures are expected to rise 1.5%.
WTI crude oil prices seem to have found short-term base support around US 78.40 per barrel due to the decline in oil stocks and stimulus news from China.
Markets were further supported by a 6.7% year-on-year increase in industrial production in April as the recovery in China’s manufacturing sector accelerated, possibly indicating stronger demand to come.
Declines in oil and refined product inventories in major global trading hubs also created optimism about the increase in oil demand, reversing the trend of rising inventories that had weighed heavily on crude oil prices in previous weeks.
The latest economic indicators from the US fueled optimism about global demand. According to Wednesday’s data, consumer prices in the US rose less than expected in April, raising expectations that interest rates will fall in the country.
These expectations were further supported Thursday by data showing the U.S. labor market is stabilizing.
In case of low interest rates could help soften the U.S. dollar, which would make oil cheaper for investors holding other currencies and increase demand.
On the supply side, the majority of investors are looking for direction from the OPEC+ meeting, which will be held online on June 1. OPEC+ oil production cuts, if extended beyond June, will likely lead to stronger prices in the medium term.
There are three possible scenarios for the outcome of the June 1 meeting. These are the extension, relaxation, or complete elimination of voluntary cuts of 2.2 million barrels per day. The current model is based on gradual resolution of outages.
