Oil slumped on weak economic data and supply cuts, rising on the back of falling stocks in the US and economic stimulus in China.
Brent oil prices rose in Asian trade on Friday as markets focused on the expectations for economic stimulus in China after weak economic data, falling inventories in the US, and supply cuts from major producers.
Prices closed marginally higher on Thursday. Brent futures rose 68 cents to $80.32 a barrel at 06:00 GMT, while West Texas Intermediate (WTI) crude rose 65 cents to $76.30 a barrel.
Brent is on track to close the week up 0.6% while WTI is on track to gain 1.2%, recording the fourth consecutive week of gains for both benchmarks.
China’s weak economic data capped prices throughout the week. The world’s second-largest oil consumer posted disappointing second-quarter GDP growth this week, raising the possibility that the economy will fail to meet its 5% annual growth target.
However, sentiment in commodity markets has raised hopes that the central government will take further stimulus measures to support the economy.
The rise in crude oil prices came as China reviewed positive comments on its stimulus and the effects of a stronger US dollar index. Beijing on Wednesday announced goals to establish plans to stabilize growth in 10 sectors, as well as increase support for private firms.
Recent data, including supportive prices, lower-than-expected inflation, and moderate employment growth have convinced many investors and analysts that the Federal Reserve’s expected rate hike in July will be the last of the current tightening cycle.
Supply fundamentals also bolstered market sentiment.
Evidence of supply cuts from Saudi Arabia and Russia heralded a recovery in prices this month.
In early July, Riyadh said it would extend its voluntary production cut of 1 million barrels per day until August, while Moscow said it would cut exports by 500,000 barrels a day in August. This tightness in supply is already showing itself in stocks.
Data from the Energy Information Administration (EIA) on Wednesday showed U.S. crude inventories fell last week, supported by higher crude oil exports as well as higher refinery use.
