Oil prices rose nearly 1.5 per cent on Friday, posting a second straight weekly increase as impending European Union sanctions on Russian oil raised the prospect of tighter supply and had traders shrugging off worries about global economic growth.
Brent futures, the global benchmark, rose $1.49, or 1.3 per cent, to settle at $112.39 per barrel. West Texas Intermediate, the gauge that tracks US crude, climbed $1.51, or 1.4 per cent, to end at $109.77 a barrel.
"In the near term, the fundamentals for oil are bullish and it is only fears of an economic slowdown in the future that is holding us back," said Phil Flynn, an analyst at Price Futures Group.
For the week, WTI gained about 5 per cent, while Brent nearly 4 per cent after the EU set out an embargo on Russian oil as part of its toughest-yet package of sanctions over the conflict in Ukraine.
The EU is tweaking its sanctions plan, hoping to win over reluctant states and secure the needed unanimous backing from the 27 member countries, three EU sources told Reuters. The initial proposal called for an end to EU imports of Russian crude and oil products by the end of this year.
Opec+ agreed on Thursday to stick to its output plan and add 432,000 barrels per day of crude to the market in June, even as oil prices rise after the EU announced a phased strategy to ban oil imports from Russia by the end of this year.
On the supply side, US oil rig count, an early indicator of future output, rose five to 557 this week, the highest since April 2020.
Money managers cut their net long US crude futures and options positions in the week to May 3, the US Commodity Futures Trading Commission said.
Investors expect higher demand from the US this autumn as Washington unveiled plans to buy 60 million barrels of crude to replenish emergency stockpiles. Yet signs of a weakening global economy fed demand concerns, limiting oil price gains.
On Thursday, the Bank of England warned Britain risks a double-whammy of a recession and inflation above 10 per cent. It raised interest rates a quarter of a percentage point to 1 per cent, their highest since 2009.
Strict Covid-19 curbs in China are creating headwinds for the world's second-largest economy and leading oil importer. Beijing authorities said all non-essential services would shut in its biggest district Chaoyang, home to embassies and large offices.