Oil prices hit their highest level in nearly two months on Friday. It rose for the second week in a row, supported by positive economic growth in the US, a decline in oil stocks, stimulus signals from China boosting demand expectations, and supply concerns in the Middle East.
Brent crude futures rose $1.12, or 1.4%, to $83.55 a barrel, the highest close since Nov. 30. WTI rose 65 cents, or 0.8%, to $78.01, also its highest close since November.
Both indicators gained more than 6% for the week, their biggest weekly gain since the week ending Oct. 13, after the start of the Israel-Hamas conflict in Gaza.
Economic stimulus news from China, stronger-than-expected GDP growth in the US in the 4th quarter, cooling of US inflation data, ongoing geopolitical risks, and a more-than-expected 9.2 million barrel drop in US commercial crude oil stocks last week contributed to prices.
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Oil also found support earlier this week from a larger-than-expected decline in US crude inventories. The reduction in inventories, especially around the WTI delivery point in Cushing, Oklahoma, and across the Midwest could put pressure on near-term futures prices.
Supply concerns are visible in the structure of Brent futures. The front-month contract premium for both Brent and WTI rose to a sixth, the highest level since November, indicating a perception of tighter supply.
A possible fuel supply disruption following a Ukrainian drone attack on an export-oriented oil refinery in southern Russia also supported prices.
On the demand side, data published on Thursday showed that the United States, the world’s largest oil consumer, recorded faster economic growth than expected in the fourth quarter. This week, China’s latest measures to boost growth also strengthened confidence.
However, the possibility that the US central bank will start interest rate cuts in May instead of March puts pressure on crude futures.
Additionally, Baker Hughes said U.S. energy firms added two oil rigs this week, bringing the number to 499.