Oil prices rose on Friday and posted a weekly gain after the Federal Reserve chair signalled US interest rate cuts could come as soon as September and as prospects of a Ukraine peace deal in the short term stalled.
The drawdown in US crude inventories that indicates higher demand in the world’s largest economy also helped crude prices to snap the two-week losing streak.
Brent, the benchmark for two thirds of the world's oil, settled 0.09 per cent up to $67.73 per barrel on Friday, while West Texas Intermediate, the gauge that tracks US crude, closed 0.22 per cent higher to $63.66 a barrel.
Both benchmarks gained more than 1 per cent in the previous session. Brent gained 2.9 per cent this week while WTI rose 1.4 per cent.
Clues during the Jackson Hole conference on Friday on possible Federal Reserve rate cuts could support growth and oil demand, Frank Walbaum, market analyst at Naga, said.
Investors kept a close watch on the Jackson Hole Economic Policy Symposium in Wyoming this week.
US Federal Reserve chairman Jerome Powell addressed the gathering of central bank leaders from around the world on Friday, which investors watched for signals of an interest rate cut next month that could support economic growth and increase oil demand.
“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Mr Powell said at the Jackson Hole economic policy symposium on Friday.
US markets rallied on Friday after his dovish comments, reversing a week of losses and sending the Dow Jones Industrial Average to a record.
On the geopolitical front, US President Donald Trump on Friday said he will see if Russian President Vladimir Putin and Ukraine President Volodymyr Zelenskiy will work together in ending Moscow's war in Ukraine.
“Oil prices are on the rise, supported by incredibly strong inventory numbers and continuing uncertainty about the prospects for peace between Russia and Ukraine,” said Phil Flynn, senior market analyst at the Price Futures Group.
“As peace negotiations continue, the big question remains: when will President Trump’s patience wear thin and prompt him to lay down the gauntlet with sanctions on Russia if peace fails?”
Oil prices have remained volatile this year amid Mr Trump’s push to slap tariffs on its global trade partners and the 12-day Israel-Iran war, which threatened crude supplies from the region.
The on-going Russia-Ukraine war has also added to uncertainty in the market amid sanctions by the Western powers to limit the flow of Russia supplies into international market to reduce Moscow's hydrocarbons revenue.
Last week, the Mr Trump met his Russian counterpart Vladimir Putin to end the conflict, which is now in its fourth year. However, the summit ended without a deal.
Mr Trump is urging the leaders of Ukraine and Russia to hold a bilateral meeting to kick-start the peace process.
US crude inventories
The US crude oil stocks fell for the week ending August 15 that indicates a higher demand, according to the latest report from the Energy Information Administration.
There has been a drop of 6 million barrels in the US commercial crude oil inventories, excluding those in the strategic petroleum reserve, for the week, from a week earlier.
At 420.7 million barrels, US crude oil inventories are about 6 per cent below the five-year average for this time of year, the EIA report said.
The latest data “gave the energy market a shot in the arm with a hefty crude draw and a gasoline supply dip”, Mr Flynn said.
The total motor gasoline inventories also decreased by 2.7 million barrels for the week and are 1 per cent below the five-year average for this time of year, according to the report.
“While the oil market still remains tight for now, and we expect Brent crude oil prices to trade at the upper part of the $60-70 per barrel range, we anticipate a moderate decline towards the bottom of the range by the end of the year,” Giovanni Staunovo, a strategist at Swiss bank UBS, said.
