Oil set for weekly gain on U.S. economic growth, Mideast supply concerns
Shafaq News/ Oil prices eased on Friday after rising to their highest since December in the previous session, but were set for their biggest weekly gain since October as positive U.S. economic growth and signs of Chinese stimulus boosted fuel demand sentiment.
Brent crude futures were down 38 cents, or 0.46%, to $82.05 a barrel by 0445 GMT. U.S. West Texas Intermediate crude fell 50 cents, or 0.65%, to $76.86.
The Brent benchmark was set to close 4.5% higher for the week, while the U.S. benchmark was set to rise 4.8%. Both were on track for their second straight week of gains and the biggest weekly increase since the week ending Oct. 13 after the start of the Israel-Hamas conflict in Gaza.
Prices slipped somewhat on Friday on signs that oil supply disruptions in the Red Sea may ease as China is pressuring Iran to curb attacks on shipping in the waters off Yemen by the Iran-aligned Houthi militia that the group started in retaliation to Israel's Gaza attacks.
Chinese officials have asked their Iranian counterparts to help rein in the attacks or risk harming business relations with Beijing, sources said.
However, the Houthis are vowing to continue targeting ships linked to Israel until aid reaches Palestinians in Gaza, the group's leader said on Thursday.
Previous interventions by U.S. and UK forces in the Red Sea had not prevented attacks, leading investors to price in continued disruption, said Yeap Jun Rong, a market strategist at IG in Singapore.
Those disruption concerns are evident in the market structure of Brent futures. The premium of the first-month Brent future to the sixth-month contract rose to $2.53 per barrel, the highest since November. This market structure, known as backwardation, when prompt prices are higher than later prices indicates traders are expecting supply tightness and stronger demand.
Demand sentiment improved after data on Thursday showed the economy of the U.S., the world's biggest oil consumer expanded more quickly than expected in the fourth quarter.
Also, China, the world's second-largest oil consumer, announced a deep cut to bank reserves to spur economic growth.
Driven by technical factors, oil markets had entered a "short-term uptrend phase", said Kelvin Wong, a markets analyst at OANDA in Singapore.
Prices saw "further positive momentum follow-through after more liquidity easing from China's central bank," Wong added.
Oil was also boosted this week by a larger-than-expected draw in crude stockpiles, and of fuel supply disruption after a Ukrainian drone attack on an export-oriented oil refinery in southern Russia.
(REUTERS)
