Oil prices increased 1 percent on Friday as involuntary cutbacks in supply from Venezuela and Iran and chaos in Libya tightened the market. Meanwhile, robust data on China’s economy relieved apprehensions about crude’s dwindling demand.
The oil market also based on the higher global stock market after the promising corporate earnings outcomes from JP Morgan. The dollar hit its lowest in over two weeks on Friday against the euro which makes crude relatively cheaper for buyers outside the U.S.
Phil Streible, Chicago-based RJO Futures senior commodities strategist, noted that equities are coming off to a favorable head start in the earning season and weakening dollar index helps bring back trust in the oil market.
Rising 1.02 percent or 72 cents, Brent crude oil future settled at $71.55 per barrel. With a 0.5 percent or 31 percent increase, U.S. WTI or West Texas Intermediate crude futures ended at $63.89 per barrel. Both standards recorded a 1 percent weekly increase. Brent is now on its third straight week rise while WTI is on its sixth consecutive streak.
The oil market has risen over 30 percent this 2019 due to the supply cutbacks initiated by the OPEC (Organization of the Petroleum Exporting Countries) and the sanctions imposed by the U.S. on crude exporters Venezuela and Iran, in addition to the growing conflict between the oil organization and Libya.
RBC markets said that geopolitically-stemmed rallies might cause the price to shoot towards or even over $80 per barrel price for irregular periods during this summer.
Libya’s National Oil Corporation head warned last Friday that the returning conflict could halt the oil production in their country. A warplane infused bombing incident occurred last Friday close to the Mellitah gas and oil plant. The facility is collaboratively operated by Libya’s NOC and Italy’s ENI which provides gas to Italy via a pipeline.
OPEC and its members will meet in June to determine if they will carry on cutting back oil supply. The group said via Saudi Arabia, the organization’s de facto leader, that it is considering to continue holding back supply. OPEC’s cutback in supply has been primarily directed to offset record oil production in the U.S.
This week, energy companies in the U.S. added active oil rigs for two consecutive weeks. GE’S Baker Hughes said in a report the action increased the total number to 833. For the past four months, the rig count plunged due to various independent explorations and reduction on spending on drilling to prioritize earnings than output.
With the demand, Chinese date shows that exports rebounded in the previous month, causing the United States and the eurozone bond to have three straight week highs that canceled out less stable imports and information about another cutback in Germany’s growth foreseen.
RBC Capital Markets said that while macro threats of economic collapse can be striking, the risk on global crude’s zest in Asia stays unappreciated.