Adedapo Adesanya
By Adedapo Adesanya
Oil appreciated on Friday as positive US economic growth and signs of Chinese stimulus boosted demand expectations, while Middle East supply concerns added support.
Brent crude futures jumped by $1.12 or 1.4 per cent to settle at $83.55 a barrel while the US West Texas Intermediate (WTI) crude futures climbed 65 cents or 0.8 per cent to $78.01 a barrel.
Both benchmarks made weekly gains of more than 6 per cent, marking their biggest weekly increase since the week ending October 13 after the start of the Israel-Hamas conflict in Gaza.
The commodity has seen support from a flurry of development including economic stimulus from China, stronger-than-expected fourth quarter GDP growth in the US, cooling US inflation data, ongoing geopolitical risks, and the larger-than-expected 9.2 million-barrel drop in US commercial crude stocks.
Pressure continued adding to worries of supply disruptions as the Houthi military spokesperson said naval forces carried out an operation targeting an oil tanker in the Gulf of Aden, causing a fire to break out.
Another potential fuel supply disruption happened after a Ukrainian drone attacked an export-oriented oil refinery in southern Russia, a move that also supported prices.
On the demand side, the US, the world’s biggest oil consumer, registered faster-than-expected economic growth in the fourth quarter.
US Gross Domestic Product (GDP) increased at a 3.3 per cent annualized rate in Q4 2023 after advancing at a 4.9 per cent pace in the third quarter, the Commerce Department’s Bureau of Economic Analysis said on Thursday.
The growth was also supported by rising exports, government spending and business investment.
Sentiment was also buoyed this week by China’s latest measures to boost growth as the People’s Bank of China announced a deep cut to bank reserves on Wednesday.
The move injected about $140 billion of cash into the banking system and send a strong signal of support for the world’s largest oil importer’s economy.
Reuters reported that traders appear to bet on the US Federal Reserve is more likely to start its round of rate cuts in May, rather than March. This weighed on crude futures.
Also curbing gains, Baker Hughes said US energy firms this week added two oil rigs, pushing the figure up to 499.
