Oil rose on Friday and posted weekly gains. The combination of high demand in China, OPEC+ supply cuts, weakness in the global economy, and expectations for further rate hikes pushed prices up this week.
Brent crude rose 94 cents to $76.61 a barrel. West Texas Intermediate (WTI) crude rose $1.16 to $71.78.
Brent gained 2.4% week on week and WTI 2.3%.
Oil rose this week in hopes of boosting demand in China. China’s refinery output rose to its second-highest total on record in May, and Chinese demand is expected to continue to rise in the second half.
Voluntary production cuts implemented in May by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, and an additional cut by Saudi Arabia in July also support crude.
Russia says oil prices reaching $80/barrel are ‘realistic’. Russia also reiterated the expectation that its oil and gas condensate production will fall by about 20 million tons (400,000 barrels per day) this year.
Iranian crude exports and oil production reached new highs in 2023 despite US sanctions, boosting global supply while other producers capped production, according to consultants, shipping data, and a source familiar with the matter.
Baker Hughes said U.S. oil rigs dropped four this week to 552, the lowest since April 2022, while gas rigs fell five to 130, the lowest since March 2022.
Honestly speaking, what limited the rise in oil prices was the possibility of rising interest rates, which could slow economic growth.
The Bank of England is set to raise interest rates by a quarter point next week. The European Central Bank raised rates to a 22-year high on Thursday, and the US Federal Reserve signaled an increase of at least half a percentage point by the end of the year.
Investors are watching interest rates and Fed members’ statements closely.
