Oil prices experienced a rise on Friday, marking the fifth consecutive week of gains, with investors holding an optimistic view that robust demand and reduced supply will maintain high prices.
The wider financial markets’ risk appetite has been stimulated by rising hopes that central banks such as the U.S. Federal Reserve and European Central Bank are nearing the conclusion of their policy tightening measures, thereby enhancing the prospects for global growth and energy demand. Supported by supply reductions from the OPEC+ alliance declared earlier this month, both oil standards nearly increased by 5% for the week, making it the fifth week in a row of gains. These benchmarks are on course to rise more than 13% this month.
Brent crude concluded 75 cents higher at $84.99 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed 49 cents to settle at $80.58 a barrel.
At one point in the session, both benchmarks fell by up to $1 as investors decided to capitalize on their profits after WTI surpassed $80 per barrel, according to Price Futures Group analyst Phil Flynn. Bullish demand projections were strengthened on Thursday following the U.S. GDP for the second quarter growing at a rate that surpassed predictions by 2.4%, supporting Federal Reserve Chairman Jerome Powell’s belief that the economy can manage a so-called “soft landing.”
PVM analyst Tamas Varga stated that investors are increasingly accepting the notion of peak rates approaching, while the possibility of the United States dodging a recession appears to be on the rise.
The latest data published on Friday revealed unexpected durability in some of the euro zone’s leading economies during the second quarter, despite multiple indicators suggesting a forthcoming slump as manufacturing suffers and services decelerate.
Concurrently, policymakers in China have committed to increasing stimulus efforts to boost the post-pandemic recovery, following a weak growth rate in the world’s second-largest economy during the second quarter.
Exxon Mobil’s chief, Darren Woods, forecasted record oil demand for this year and the next in an interview conducted on Friday.
Regarding supply, the number of U.S. oil rigs declined by one to 529 this week, marking the lowest count since March 2022, as stated by energy services company Baker Hughes on Friday. This data is a future supply predictor.
Signs of market tightening are becoming more evident, considering the falling U.S. stockpiles and Saudi Arabia’s voluntary reduction of 1 million barrels per day, according to Commerzbank analysts. They emphasized that this month could witness OPEC oil production dropping to its smallest volume since the fall of 2021.
Saudi Arabia is anticipated to prolong the voluntary oil output cut for another month, encompassing September, as stated by five analysts, to further bolster the oil market.
