Oil prices surge by more than $1 a barrel on Thursday, after falling for two consecutive sessions, on the prospect of supplies given the Opec+ producer alliance is widely expected to stay the course on its current production cuts.
Brent crude futures for May were up $1.30, or 1.5pc, at $87.39 a barrel at 1:28 pm EDT (1728 GMT). The more actively traded June contract rose $1.22, or 1.4pc, to $86.43 at 1:28 pm. The May contract expires on Thursday
Both benchmarks were up more than 2 per cent weekly and on track to finish higher for a third consecutive month.
According to Energy Information Administration data, oil prices had come under pressure in the prior session from last week’s unexpected rise in US crude oil and gasoline inventories, which was driven by an increase in crude imports and sluggish gasoline demand.
However, the crude stock increase was smaller than the build projected by the American Petroleum Institute, and analysts noted the increase was lower than expected for the time of year.
“We… expect US inventories to rise less than normal in reflection of a global oil market in a slight deficit,” SEB analyst Bjarne Schieldrop said. This will likely support the Brent crude oil price in the future.” US refinery utilisation rates, which rose 0.9 percentage points last week, also supported prices.
The US economy, meanwhile, grew faster than previously estimated in the fourth quarter. Gross domestic product increased at a 3.4pc annualised rate from the previously reported 3.2pc pace, the Commerce Department’s Bureau of Economic Analysis said.
“The strength in the stock market suggests strong forward earnings that are, in turn, hinting at a surprisingly strong US economy conducive toward better than expected energy product demand,” said Jim Ritterbusch of energy consultancy Ritterbusch and Associates.
