Oil prices, which eased slightly on Friday, were on track to end higher for a second straight week following a large cut in U.S. interest rates and declining global stockpiles.
Brent futures, which were trading 12 cents, or 0.2%, lower at $73.76 a barrel at 0658 GMT on Friday, gained 4.3% this week. U.S. WTI crude futures, which were down 15 cents, or 0.2% at $71.80 a barrel, registered weekly gains of 4.8%.
The benchmarks have been recovering after they fell to near three year-lows on Sept. 10, and have registered gains in five of the seven sessions since then.
Prices pared some gains on Friday, after rising more than 1% on Thursday following the U.S. central bank’s decision to cut interest rates by half a percentage point on Wednesday. Interest rate cuts typically boost economic activity and energy demand, but some also see it as a sign of a weak U.S. labour market.
“Prices had been under pressure in recent months amid concerns demand would weaken, as tight monetary policies stifled economic activity,” analysts at ANZ Research said in a note.
“Easing monetary policy helped reinforce expectations that the US economy will avoid a downturn,” ANZ said.
Also supporting prices were a decline in U.S. crude inventories, which fell to a one-year low last week.
A counter-seasonal oil market deficit of around 400,000 barrels per day (bpd) will support Brent crude prices in the $70 to $75 a barrel range during the next quarter, Citi analysts said on Thursday, but added prices could plunge in 2025.
Crude prices were also being supported by rising tensions in the Middle East. Walkie-talkies used by Lebanese armed group Hezbollah exploded on Wednesday following similar explosions of pagers the previous day.
Security sources have said the Israeli spy agency Mossad was responsible, but Israeli officials have not commented on the attacks.
Weak demand from China’s slowing economy was weighing on prices, with refinery output in China slowing for a fifth month in August. China’s industrial output growth also slowed to a five-month low last month, and retail sales and new home prices weakened further.
(Reporting by Sudarshan Varadhan; Editing by Lincoln Feast and Sharon Singleton)