By Adedapo Adesanya
Crude oil gained more than $1 per barrel on Friday and ended the week higher, driven by renewed optimism around demand from top oil importer, China.
Brent crude futures rose by $1.08 or 1.3 per cent to settle at $85.83 per barrel, while the United States West Texas Intermediate (WTI) crude futures grew by $1.52 or 1.9 per cent to trade at $79.68 a barrel.
Both benchmarks posted their highest closing levels since February 13.
The release of new factory data from China suggested activity was picking up in line with expectations of a fast rebound from last year’s Covid lockdowns.
According to China’s National Bureau of Statistics, an official index published on Wednesday showed that manufacturing activity expanded at the fastest pace in more than 10 years.
The manufacturing purchasing managers’ index (PMI) shot up to 52.6 from 50.1 in January, beating expectations as production rose after the lifting of COVID-19 restrictions in December last year.
China’s service sector activity in February also expanded at the fastest pace in six months.
Support also came as the US Dollar weakened. Based on this, analysts expect the greenback to be under pressure over the next 12 months, which would make dollar-denominated commodities like oil cheaper for holders of other currencies.
Pressure came to the market after a media report said the UAE had held internal debates on leaving the Organisation of the Petroleum Exporting Countries (OPEC) and pumping more oil.
Due to a gradually growing rift between longtime close allies Saudi Arabia and the UAE, the latter is now debating withdrawing from OPEC, the Wall Street Journal reported, citing unnamed Emirati officials.
UAE has for some time wanted to increase its crude output to boost its revenue but has been limited by OPEC+ production agreements dominated by the group’s kingpin and largest producer, Saudi Arabia.
Later on, Reuters reported that two sources with direct knowledge told the agency that the report was “far from the truth”.
A potential exit for the Gulf producer from OPEC would unsettle the group, especially as it comes within four years of two prior departures, Qatar in 2019 and Ecuador in 2020.
