Oil prices edged ahead for a second session on Friday, buoyed by stronger-than-expected U.S. economic growth and hopes of a rapid recovery in Chinese demand as COVID-19 cases and deaths plunged from last month’s peak levels.
Brent futures gained 18 cents, or 0.2%, to US$87.65 a barrel by 0724 GMT, while U.S. crude rose 22 cents to US$81.23 per barrel, a 0.4% gain. Both benchmarks had gained more than 1% on Thursday.
The prices were flat compared with last Friday’s close. If they end at higher levels, it would mark the third straight week of gains for crude.
“Oil might have trouble making any substantial moves to finish the week as many traders will wait to see what happens with next week’s two massive events; the OPEC+ virtual meeting on output and the FOMC decision,” said Edward Moya, senior market analyst at OANDA.
OPEC+ delegates will meet next week to review crude production levels, amid steady support for crude prices from strong demand for jet fuel and diesel. The U.S. Federal Reserve will decide on another rate hike, as inflation cools and gross domestic product improves.
Gains on U.S. crude were limited by a 4.2 million barrel build in stocks at Cushing, the pricing hub for NYMEX oil futures, earlier this week.
Still, oil markets were boosted by broad optimism on the first day of the return of Chinese stock markets as China’s reopening still plays a main role in boosting the demand outlook, said Tina Teng, analyst at CMC Markets.
Critically ill COVID-19 cases in China are down 72% from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped 79% from their peak, pointing to a normalisation of the Chinese economy and boosting expectations of a recovery in oil demand.
“The short-term bullish factor is that the recent outage in the U.S. refineries helped push up gasoline prices, though the U.S. crude inventories hit a 16-month high,” Teng said.