Oil Prices Rise 1% on Optimism for Increased Demand: Weekly Gain for Brent Crude

Oil prices increased by about 1% on Friday, with Brent crude marking its first weekly gain in three weeks. This rise came after positive economic indicators from China and the U.S., the world’s top two oil consumers, raised hopes for increased demand.

Brent settled at $83.98 a barrel, up 71 cents, while U.S. West Texas Intermediate crude (WTI) gained 83 cents to reach $80.06. Brent saw a weekly gain of about 1%, while WTI rose by 2%.

China’s industrial output rose by 6.7% year-on-year in April, signaling a strengthening manufacturing sector and suggesting potential for increased demand. Additionally, China unveiled measures to stabilize its troubled property sector. However, a drop in China’s annual refined output may have tempered some of this optimism.

Optimism about demand was further supported by declines in oil and refined product inventories at global trading hubs, reversing previous trends of rising stockpiles that had weighed on oil prices.

In the U.S., the oil rig count increased by one this week to 497, the first rise in four weeks, according to Baker Hughes. Positive U.S. economic indicators, including lower-than-expected consumer prices in April, also contributed to optimism about global demand for oil.

Lower U.S. interest rates could potentially soften the dollar, making oil cheaper for buyers holding other currencies.

On the supply side, a fire broke out at Russia’s Tuapse oil refinery following Ukrainian drone attacks, though the extent of the damage remains uncertain.

Investors are awaiting direction from the upcoming OPEC+ meeting on June 1. Analysts anticipate a continuation of current production cuts, with Brent crude hovering below $90, a level targeted by Saudi Arabia and others.

According to the U.S. Commodity Futures Trading Commission (CFTC), money managers increased their net long U.S. crude futures and options positions in the week ending May 14.

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