LONDON: Oil rose towards $73 a barrel on Friday, supported by growing signs of supply tightness in the United States as a result of Hurricane Ida and as US-China trade hopes gave riskier assets a boost.
About three-quarters of the US Gulf’s offshore oil production, or about 1.4 million barrels per day, has remained halted since late August. That amount is roughly equal to what OPEC member Nigeria produces.
“With the restart in offshore crude production lagging, the odds are that the Ida effect will still be felt in the coming weeks,” said Stephen Brennock of oil broker PVM.
Brent crude rose $1.23, or 1.7 per cent, to $72.68 by 1047 GMT. US West Texas Intermediate (WTI) crude was at $69.22, up $1.08 or 1.6 per cent.
Oil and equity markets also got a boost from news of a call between US President Joe Biden and his Chinese counterpart Xi Jinping. The call raised hopes for warmer relations and more global trade, analysts said.
“The Biden-Xi phone call has had the same effect on oil markets as it has on other asset classes,” said Jeffrey Halley, analyst at brokerage OANDA.
Brent was on track to end the week with a small gain and has rallied almost 40 per cent this year, driven by supply cuts by the Organization of the Petroleum Exporting Countries and some demand recovery from the pandemic.
On Thursday, both crude contracts had fallen more than 1 per cent after China said it would release crude oil reserves via public auction to help ease high feedstock costs for refiners, a move described as a first.
In focus next week will be revisions to the oil demand outlook for 2022 from OPEC and the International Energy Agency, and whether the spread of the Delta variant of Covid-19 delays a full return to 2019 demand levels.
US stock index futures rose on Friday, as signs of an easing in tensions between the United States and China added to recent data that soothed fears of a slowdown in the economic recovery.
Traders read news of a phone call between US President Joe Biden and Chinese leader Xi Jinping, their first talks in seven months, as a positive sign that could bring a thaw in ties between the world’s two most important trading partners.
US-listed Chinese e-commerce companies Alibaba and JD.com, ride-hailing firm Didi, music streaming company Tencent Music and electric car maker Nio Inc all gained between 0.6 per cent and 2.7 per cent.
The energy sector was the top gainer, with Exxon Mobil, Occidental Petroleum, Chevron, Halliburton rising between 0.9 per cent and 1.9 per cent, as they tracked higher oil prices on signs of supply tightness.
Data on Thursday showed weekly jobless claims fell to a near 18-month low, allying concerns about economic growth but also stoking fears that the Federal Reserve could act faster to scale back stimulus. — Reuters
