Oil prices were little changed on Thursday, but posted a third weekly gain as markets put pressure on falling US oil inventories and further production cuts targeted by OPEC+ to counter fears over the global economic outlook.
Brent crude was up 13 cents, or 0.2%, at $85.12 a barrel. West Texas Intermediate (WTI) crude was up 9 cents, or 0.1%, to close at $80.70. There will be no trading during the Good Friday holiday.
Both indicators rose more than 6% this week after OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia surprised the market with a commitment to cut production on Sunday.
Prices were supported by a steeper-than-expected drop in US crude inventories last week and a second consecutive weekly drop. Gasoline and distillate stocks also decreased, indicating an increase in demand.
U.S. energy firms also reduced the number of oil rigs for the second week in a row this week. The number of rigs, an early indicator of future production, fell two this week to 590, according to Baker Hughes data.
US labor market data, which capped earnings, pointed to slowing economic growth, and slower-than-expected growth in the US services sector. Demand destruction, a function of the recession threat, is a bigger concern than the cut by OPEC+.
Downside hedged put option buyers are more active than call option buyers who think prices will go up, meaning traders are worried that prices might fall.
Buyers of put options that hedge downside risk were more active than buyers of call options, which bets on rising prices, meaning traders are worried that prices might fall.
The bullish momentum of the oil market may have stalled, but the upside potential remains due to tight supply.
