Oil Dips But Remains On Track For Weekly Gain On US, Chinese Growth
Oil prices weakened slightly on Friday, but remain set for a second weekly gain as positive US economic growth and signs of Chinese stimulus boosted demand sentiment, while Middle East supply concerns added further support.
Brent crude futures were down 94 cents at USD 81.50 a barrel by 12:12 a.m. ET (17:12 GMT), having set their highest price so far this year with an intra-day peak of USD 82.80.
US West Texas Intermediate crude was down USD 1.07, or 1.4 per cent at USD 76.27.
Prices dipped on Friday on hopes that oil shipping disruptions in the Red Sea could ease after Chinese officials asked Iran to help rein in attacks on ships by the Iran-aligned Houthis or risk harming business relations with Beijing.
The United States risks some exposure to China's economic slowdown and shipping disruptions in the Red Sea, but they appear contained, the White House National Economic Council director said on Friday, adding the US economy is "upbeat."
"While oil supply hadn't been directly affected by the events in the Middle East, the geopolitical risk premium had boosted the price, which is now unwinding slightly today," said Fiona Cincotta, senior financial market analyst at City Index.
Brent crude and the US benchmark were set for weekly gains of nearly 4 per cent. Both were on track for their biggest weekly increase since the week ending 13 October after the start of the Israel-Hamas conflict in Gaza.
The markets were seeing some light profit-taking off recent gains, said Tim Evans, an independent oil analyst.
The United States, the world's biggest oil consumer, registered faster than expected economic growth in the fourth quarter, data showed on Thursday. Oil demand sentiment was also buoyed this week by China's latest measures to boost growth.
Oil was also boosted this week by a larger-than-expected drawdown in US crude stockpiles and a potential fuel supply disruption after a Ukrainian drone attack on an export-oriented oil refinery in southern Russia.
OPEC+ will likely decide its oil production levels for April and beyond in the coming weeks, OPEC+ sources said, adding a meeting of a key ministerial panel on Thursday would take place too early to make decisions on further output policy.
Supply concerns are evident in the structure of Brent futures. The premium of the first-month contract to the sixth on both Brent and WTI rose to the highest since November, indicating a perception of tighter prompt supply.
Meanwhile, traders bet on Friday that the US central bank is more likely to start its round of rate cuts in May, rather than March, weighing on crude futures at the week's end.
