(Reuters) – Oil prices gained on Friday, with global benchmark Brent set for its first weekly increase in three weeks on signs of improving global demand amid stronger economic indicators from key consumers China and the United States.
Brent crude oil prices climbed 21 cents, or 0.25%, to $83.48 a barrel by 0314 GMT. US West Texas Intermediate (WTI) crude futures rose 7 cents, or 0.09%, to $79.30 a barrel.
Brent futures are set to rise about 1% on a weekly basis, with WTI futures set to gain 1.4%.
"WTI crude oil prices seem to have found a near-term floor/support at around US$78.40/barrel after a 9%+ decline from 26 April in the past week due to several encouraging factors such as two consecutive weeks of decline in US crude oil stockpile and more upcoming 'piecemeal' stimulus measures from China," said OANDA senior market analyst Kelvin Wong, referring to the country's potential programme to buy up unsold homes directly from property developers.
Markets were also bolstered by China's industrial output growth at 6.7% year-on-year in April as recovery in its manufacturing sector gathered pace, pointing to possibly stronger demand to come.
Declines in oil and refined products inventories at major global trading hubs have also created optimism over oil demand growth, reversing a trend of rising stockpiles that had weighed heavily on crude oil prices in prior weeks.
Recent economic indicators from the United States have fed into the optimism over global demand. US consumer prices rose less than expected in April, data showed on Wednesday, boosting expectations of lower interest rates in the country.
Those expectations were further bolstered by data on Thursday that showed a stabilizing US job market.
Lower interest rates could help soften the US dollar, which would make oil cheaper for investors holding other currencies and drive demand.
On the supply side, investors were mostly looking for direction from an upcoming OPEC+ meeting on June 1, which will likely be held online.
An extension of OPEC+ cuts in oil output beyond June is likely to see firmer prices in the medium term, said OANDA's Wong.
ANZ analysts said in a client note: "We see three possible scenarios for the outcome of the 1 June meeting: extend, unwind or complete removal of the voluntary cuts of 2.2mb/d. Our current model is based on a gradual unwinding of the cuts in H2 2024. Even with that, we see the market moving into a deficit, with the future call on OPEC production well above current output."