Brent crude on Friday surged to its best weekly gain in more than two years as encouraging economic news out of the US helped oil markets turn the page on last year’s price collapse.
The global benchmark ended the week up 9.3 percent for its best showing since December 2016.
Oil rallied alongside the US stock market following a strong jobs report and dovish comments on interest rates from the US Federal Reserve.
Production declines from Saudi Arabia to Libya also buoyed a market that last year plummeted on fears of a supply glut.
“The economy in many ways looks strong and that should be good for demand,” Winchester, Massachusetts-based Strategic Energy and Economic Research president Michael Lynch said. “You’re getting some people buying back in, as they look out and decide the market has gotten oversold.”
US crude finished the week up 5.8 percent, undoing some of the damage from its 40 percent slide at the end of last year.
Prices have rallied as protests and bad weather curtailed exports in Libya and data showed that Saudi Arabia was reducing output even before an OPEC cut scheduled to start this month.
“Underpinning this wave of buying is mounting evidence that Saudi Arabia has taken an ax to its oil production,” PVM Oil Associates Ltd analyst Stephen Brennock said.
Brent for March settlement on Friday added US$1.11, or 2 percent, to settle at US$57.06 per barrel on the ICE Futures Europe exchange in London.
West Texas Intermediate for delivery next month rose US$0.87 to US$47.96 per barrel on the New York Mercantile Exchange. The March West Texas Intermediate contracts traded at an US$8.78 discount to Brent for the same month.
The positive economic news was enough for traders to shake off an unexpected jump in US crude stockpiles.
The slight increase was far off the decline expected at year-end, when tax adjustments and winter fuel demand typically drive refiners to sop up more oil.
Petroleum product supplies also surged, with gasoline inventories surging by 6.9 million barrels and US Gulf Coast stockpiles reaching a record.
US exports of crude and refined products also fell sharply from the prior week. That might have been a holiday lull or the result of temporary congestion at US ports, said Rob Thummel, managing director at Tortoise, a money manager that oversees US$16 billion in energy investments.
US refineries operated at 97.2 percent of capacity, with plants consuming the most crude on a seasonal basis ever, according to data going back to 1989.
“That could be a sign the refiners expect pretty strong consumer demand as we move forward,” Thummel said.
Wholesale gasoline dipped 0.1 percent to US$1.35 per gallon, while heating oil added 1.6 percent to US$1.77 per gallon and natural gas rose 3.4 percent to US$3.04 per 1,000 cubic feet.
In other commodities, gold fell 0.7 percent to US$1,285.80 per ounce and silver slipped 0.1 percent to US$15.79 per ounce, while copper rose 3.1 percent to US$2.65 per pound.
Additional reporting by AP
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