Tightening supply lifts oil; IEA demand outlook expected. Oil prices increased on Friday as the market awaited the International Energy Agency’s (IEA) monthly report to explain global demand.
By 0600 GMT, Brent crude futures rose 36 cents, or 0.42%, to $86.45. WTI increased 43 cents, or 0.52%, to $82.59 a barrel.
Last session, both benchmarks fell over 1%.
“Russian exports are showing signs of weakening as production is reported to have been curtailed by 700,000 barrels per day (bpd),” ANZ Bank analysts wrote in a client note.
Investors await the IEA’s monthly oil market report on Friday. Prices are capped by the agency’s likelihood to lower global demand due to slowing macroeconomic development.
On Thursday, OPEC warned of summer demand declines due to poorer GDP, stricter monetary policy, and global financial turmoil.
However, Chinese trade statistics on Thursday showed that crude imports by the world’s second-largest oil user surged 22.5% year-on-year in March, boosting economic optimism.
“Despite renewed economic pressures in the U.S. and Europe, global demand for mobility fuels has increased 2.2 million bpd during the reference week ending April 8, compared to year-ago levels,” JP Morgan analysts wrote in a client note.
Analysts said two-thirds of the global mobility fuel demand increase came from a comeback in China and other Asian countries.
Both benchmarks hit their highest levels in over two months on Friday morning on decelerating U.S. inflation statistics and a falling dollar.
WTI is up 2% and Brent 1.3% this week, set for a fourth week of gains.
This week’s U.S. dollar index reports suggested the Fed was winding down its rate hike cycle.
Investors holding foreign currencies buy dollar-denominated oil because the currency is declining.
However, analysts believe prices are near a technical limit.
“It looks like the rally in crude prices has finally hit a wall,” OANDA analyst Edward Moya said.
CMC Markets analyst Leon Li expects oil prices to rise, not over $90 a barrel.
