Oil prices rose more than 4 percent on Friday, rebounding from a four-month low hit in the previous session as investors took short-term profits and were supported by U.S. sanctions on some Russian oil shippers.
Despite a somewhat natural profit-taking recovery, it is down for the fourth week.
Brent crude futures rose $3.19, or about 4.1%, to $80.61 a barrel, while West Texas Intermediate crude (WTI) rose $2.99, or about 4.1%, to $75.89 a barrel.
Some of the losses were offset after the U.S. imposed sanctions this week on maritime companies and vessels for shipping Russian oil sold above the Group of Seven’s (G7) price cap.
The fourth consecutive weekly declines were driven mostly by increases in U.S. crude inventories and continued record production. The deepening real estate crisis and slowing industrial growth in China were also effective in this. The increase in demand from China remains below expectations.
In the US, the number of active rigs has been declining for nearly a year due to weak prices. But energy services company Baker Hughes said the number of oil rigs rose by six this week, the biggest increase since February.
When there is a sharp drop in price, manufacturers are not so willing to continue with capital expenditures and projects.
Some analysts said Thursday’s sharp selloff may have been exaggerated, especially in light of rising tensions in the Middle East that could disrupt oil supplies and a U.S. pledge to impose sanctions against Hamas-backed Iran.
With Brent below $80, many analysts expect OPEC+, especially Saudi Arabia and Russia, to extend production cuts into 2024.
According to sources, the OPEC+ group, consisting of the Organization of the Petroleum Exporting Countries and its allies, will consider whether additional oil supply cuts will be made when it meets later this month.
Oil prices have fallen slightly this year, although demand has exceeded optimistic expectations. Because non-core OPEC supply has been much stronger than expected, partially offset by OPEC cuts.
The United States, which accounts for two-thirds of non-OPEC+ growth, is expected to generate annual gains of 1.4 million barrels per day (bpd) in 2023, according to the International Energy Agency (IEA).
Meanwhile, inflation in the euro area appears to be eroding. On Friday, the EU’s statistical office confirmed that annual inflation has slowed sharply.