Oil headed for a weekly surge of about eight per cent as ongoing disruption to Iraqi exports tightened the market ahead of US inflation data.
West Texas Intermediate futures rose near $75 a barrel Friday after closing almost two per cent a day earlier. Prices have been supported by the shutdown of Iraqi flows amid a dispute between Baghdad and the Kurdistan region. Talks are set to take place next week, which may see the resumption of more than 400,000 barrels a day of shipments sent through Turkey.
Oil is still on track for a fifth monthly loss, primarily due to the banking crisis that rippled through markets in recent weeks, though the worst of the turmoil appears to be over. Bearish sentiment has also been supported by resilient Russian oil supply and strikes in France that have curbed crude demand.
Yet China’s recovery has gathered pace, with manufacturing continuing to expand and construction picking up. Most market watchers are betting the nation’s rebound will help to underpin higher oil prices later this year.
In the short term, investors will be watching US inflation figures later Friday for clues on the path forward for monetary tightening, as Federal Reserve officials continue to stress the need to keep price growth in check.
“Receding banking risks certainly provide buoyancy, as could the narrative of cooling inflation,” said Vishnu Varathan, the Asia head of economics and strategy at Mizuho Bank Ltd. “Add to that supply disruption risks, and we have oil that is less nervy and more likely to challenge barriers to ascend.”
- WTI for May delivery rose 0.8 per cent to $74.93 a barrel at 12:50 p.m. London time.
- Brent for May settlement, which expires Friday, gained 0.2 per cent to $79.46 a barrel.
- The more-active June contract advanced 0.5 per cent to $78.96.
© 2023 Bloomberg L.P.