Oil prices climbed on Friday, buoyed by rising demand from major consumers like the United States and China, while signals from the U.S. Federal Reserve hinted at the possibility of rate cuts.
Brent crude futures rose by 0.6%, or 49 cents, to $83.45 a barrel by 0415 GMT, while U.S. West Texas Intermediate crude futures saw a 0.7% increase, or 60 cents, reaching $79.53 per barrel. However, both contracts experienced slight declines over the week, with Brent and WTI down 0.1% and 0.5% respectively.
The Energy Information Administration reported a notable decrease in U.S. gasoline inventories by 4.5 million barrels last week, accompanied by a 4.1 million-barrel decline in distillate stockpiles, surpassing expectations and indicating robust demand. ANZ Research noted that with the U.S. driving season approaching, the market could tighten further in the coming weeks.
In China, crude oil imports surged by 5.1% in the first two months of 2024 compared to the same period last year. Meanwhile, India saw a 5.7% increase in fuel consumption in February compared to the previous year, driven by strong factory activity in the third-largest oil importer and consumer globally.
Capital Economics observed that after adjusting for the extra day in February this year, China’s crude oil imports rose by 3.3% annually, aligning with expectations of increased demand for the year ahead.
“But that growth will be substantially lower than in 2023, when the end of zero-COVID restrictions led to a surge in activity in transport and travel,” it added.
Federal Reserve Chair Jerome Powell’s remarks on Thursday, indicating the central bank’s readiness to cut interest rates, further bolstered oil prices.
“Weakness in the U.S. dollar may have offered some support thus far, as Powell’s comments seem to fall short of the hawkishness that was initially expected,” said Yeap Jun Rong, a market strategist at IG.
In Canada, TC Energy’s Keystone oil pipeline resumed service on Thursday after being offline temporarily, which had previously contributed to supporting prices.