By Adedapo Adesanya
The price of a crude benchmark, Brent Crude, rose on Friday, nearing $85 per barrel as it notched a fifth straight week of gains as investors were optimistic that healthy demand and supply cuts will support prices.
It gained 75 cents to settle at $84.99 a barrel, as the US West Texas Intermediate (WTI) crude improved its value by 49 cents to $80.58 a barrel.
The upward movement was fuelled by supply tightness resulting from production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+.
These cuts, along with some involuntary outages, have supported the oil market, resulting in five consecutive weeks of gains.
Despite Wednesday’s drop in oil prices, the overall outlook remained positive despite the US Federal Reserve interest rate hike and lower-than-expected US crude inventories.
However, market analysts still hold a favourable view on oil as the US Federal Reserve and European Central Bank also indicated that they were nearing the end of policy tightening campaigns.
This development shows promises for global growth and energy demand, further bolstering the outlook for oil prices.
The US economy also provided support to the market, with government data revealing a stronger-than-expected 2.4 per cent gross domestic product (GDP) growth in the last quarter.
This growth was driven by a resilient labour market, which boosted consumer spending, and increased business investments in equipment, reducing the risk of a recession.
Support also came as fresh data released on Friday showed some of the euro zone’s top economies displayed unexpected resilience in the second quarter of this year. France and Spain grew at a sustained pace on the back of stronger exports and tourism, while Germany, the euro zone’s biggest country, remained the worst-performing major economy in the bloc.
Also, the market is holding on to the pledge made by the Chinese government to step up stimulus measures to strengthen the post-COVID recovery after the world’s second-largest economy grew at a weak pace in the second quarter.
OPEC+ is expected to meet on August 4 as Saudi Arabia is expected to extend the voluntary oil output cut for another month to include September to provide additional support for the oil market.
On the supply side, US oil rigs fell by one to 529 this week, their lowest since March 2022, energy services firm Baker Hughes said on Friday.
Dipo Olowookere