Oil prices settled higher on Friday and posted a fourth straight weekly gain as falling crude stocks offset demand concerns.
Brent, the benchmark for two thirds of the world’s oil, added 1.8 per cent, or $1.43, to close at $81.07 a barrel. West Texas Intermediate, the gauge that tracks US crude, rose 1.88 per cent, or $1.42, to settle at $77.07 a barrel.
“Brent crude looks like it wants to find a home below the $80-level and that might support a broadening formation until next Wednesday’s [US Energy Information Administration] report and [Federal Open Market Committee] meeting,” said Edward Moya, a senior market analyst at Oanda.
Crude futures have recorded three straight weeks of gains on additional output reductions by Opec+ members and as cooling inflation in big economies eases concerns about aggressive interest increases by central banks.
On Friday, Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure, said current actions by Opec+ are "sufficient" for now.
"But we are constantly meeting and if there is a requirement to do anything else then during those meetings, we will pick it up. We are always a phone call away from each other," he told Reuters in Goa, India, where he is attending G20 energy ministerial meetings.
On Saturday at the same event, he reiterated that what Opec+ is doing is "adequate and we are addressing that [demand and supply]".
"We are doing this on behalf of all producers around the world and for the benefit of balancing demand and supply for all the consumers as well."
Last week, Brent breached $80 for the first time since April as US inflation came in lower than expected at 3 per cent in June, the smallest increase since March 2021.
However, weak economic data from China weighed on futures this week.
Gross domestic product in the world’s second-largest economy expanded by an annual 6.3 per cent from April to June, after growing by 4.5 per cent in the previous three months, according to the National Bureau of Statistics.
However, the pace of growth in the second quarter missed the 7.1 per cent estimate of economists polled by Bloomberg and the 7.3 per cent forecast of those surveyed by Reuters.
Quarterly, GDP growth was only 0.8 per cent between April and June, compared with the previous three months.
China’s economy, which rebounded after Beijing lifted Covid-19 restrictions at the start of the year, lost momentum in May, posting weaker retail sales and manufacturing output while the property sector slowed down.
Meanwhile, US crude inventories, an indicator of fuel demand, fell by about 700,000 barrels to 457.4 million barrels in the week ending on July 14, according to the EIA.
However, analysts polled by Reuters were expecting a drop of 2.4 million barrels.
Petroleum stocks decreased by 1.1 million barrels last week while distillate stocks rose slightly, official data showed.
In a research note this week, Goldman Sachs said it did not expect crude oil prices to hit $100 a barrel this year amid a lower possibility of Opec+ making deeper supply cuts and as China’s crude stocks approach record highs.
The market is pivoting to a deficit in the second half of the year, the US investment bank said, with prices expected to move towards $86 a barrel.
However, a significantly larger deficit of 3.3 million barrels per day would be required to push crude prices back to three figures, Goldman Sachs said.
Earlier this month, Saudi Arabia, the world’s largest crude exporter, said it would extend its voluntary output cut of a million bpd until August.
Russia has also pledged to cut its oil supplies by 500,000 bpd in August on top of the output reductions that have already been announced.
On June 4, Opec+ agreed to keep its current output policy in place until the end of 2024.
Weaker-than-expected growth in China has led the market to believe in a situation of oversupply, MUFG said in a research note on Thursday.
China still managed to add about two million bpd of crude oil to stocks over the month – the largest build-up since May 2022, the Japanese bank said.
Moves between supply shortages and oversupply will be “critical” to observe in the coming months, MUFG said.
“Given the tightening that we expect in the oil market further into the second half of this year, we believe it is only a matter of time before Brent crude oil prices quietly spur higher into the low to mid-$80-a-barrel levels,” MUFG said.
“The key lies in if we see a big shift in speculative sentiment.”