Economy 2 MIN READ

Oil prices set for second straight weekly gain after U.S. data

July 7, 2023By Reuters

Oil prices rose on Friday and were on track for their second straight weekly gain, as resilient demand resulted in a larger-than-expected fall in US oil stockpiles, offsetting fears of higher US interest rates.

Brent crude futures were up 31 cents, or 0.4%, at USD 76.83 a barrel at 0819 GMT, while US West Texas Intermediate crude gained 31 cents, or 0.4%, to USD 72.11 a barrel.

Both benchmarks were set to gain about 2% on the week.

Brent is still trading around USD 10 a barrel below April peaks, and has remained between around USD 71 and USD 79 a barrel since early May in the face of interest rate hikes and weak Chinese economic data.

“The crude demand outlook is starting to look better as we enter peak summer travel in the US, and as the Saudis were able to raise prices to Europe and Asia,” said Edward Moya, an analyst at OANDA.

US crude stocks fell more than expected on strong refining demand, while gasoline inventories posted a large draw after an increase in driving last week, the Energy Information Administration said on Thursday.

However, oil price gains were capped by strengthening expectations that the US Federal Reserve is likely to raise interest rates at its July 25-26 meeting, which could weigh on growth and thus oil demand.

The number of Americans filing new claims for unemployment benefits increased moderately last week, while private payrolls surged in June, data showed on Thursday.

More US employment data is due at 1230 GMT.

Top oil exporters Saudi Arabia and Russia this week have also announced fresh output cuts for August. The total cuts by OPEC and its allies now stand at around five million barrels per day (bpd), equating to 5% of global oil output.

OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said.

Investors will look for cues on rate paths from U.S. and Chinese inflation data next week.

(Additional reporting by Sudarshan Varadhan in Singapore; editing by Jason Neely)

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