Oil prices advanced during Asian trading on Friday, marking a significant weekly gain for global benchmark Brent, its first increase in three weeks. The uptick comes amid encouraging indications of improving global demand and a deceleration in inflation in the United States, the top oil consumer.
By 0018 GMT, Brent crude oil prices climbed by 21 cents, or 0.3%, reaching $83.48 a barrel. U.S. West Texas Intermediate (WTI) crude futures also rose, gaining 18 cents, or 0.2%, to hit $79.41 a barrel.
Brent futures are on track to rise approximately 1% for the week, while WTI futures are poised to gain 1.4%.
Recent declines in oil and refined products inventories at major global trading hubs have instilled optimism regarding oil demand growth, reversing the trend of rising stockpiles that previously weighed heavily on crude oil prices. Until Thursday, Brent crude futures had declined by around 10% from this year’s peak of $92.18 a barrel on April 12.
In the United States, oil and fuel inventories witnessed a decrease last week, while Singapore’s middle distillate fuel stocks dropped to nearly a three-month low this week. Additionally, gasoline stocks in Europe’s Amsterdam-Rotterdam-Antwerp trading hub were down by 7.5% in the week leading up to Thursday, according to data from consultancy Insights Global.
Encouraging economic indicators from the United States have further fueled optimism regarding global demand. Data released on Wednesday revealed that U.S. consumer prices rose less than anticipated in April, heightening expectations of reduced interest rates in the country. This sentiment was reinforced by Thursday’s data indicating a stabilization in the U.S. job market.
Lower interest rates have the potential to weaken the U.S. dollar, rendering oil more affordable for investors holding other currencies and thus stimulating demand.
Financial markets now have placed the most bets on a September interest rate cut by the Federal Reserve, which would continue to temper the dollar strength and shift that strength over to commodities and equities,” noted StoneX oil analyst Alex Hodes on Thursday.