Oil prices grew on Friday after U.S. inventory data showed lackluster fuel demand in the world’s largest oil consumer while worsening U.S.-China tensions weighed on global financial markets.
U.S. West Texas Intermediate crude was at $34.90 a barrel, up $1.17, or 3.43%.
Brent crude jumped 1.79$, or 5%, to $37.17 a barrel. Still, both contracts are set for a fifth weekly gain, helped by production cuts and optimism about demand recovery in other countries.“The rally needs a breather. It has been four weeks of gains and the market needs to buy time for downstream prices to catch up,” OCBC economist Howie Lee said.
“Beyond the short term, the bullish momentum still looks rather intact.”
Thursday’s data from the Energy Information Administration showed that U.S. crude oil and distillate inventories rose sharply last week. Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said.
“Memorial Day weekend did not bring U.S. motorists out in droves like many market bulls were hoping,” RBC Capital Markets analyst Christopher Louney said in a note.
Looking ahead, traders will be focusing on the outcome of talks on output cuts between members of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the second week of June.
Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.