Oil finished higher for the week after a volatile trading session that pitted gnawing doubts about global demand against supply threats from the Middle East and beyond.
Futures gained 0.3 percent in New York on Friday and ended the week up nearly 1 percent, reversing from last week’s steep loss.
Oil turned higher after Mexico’s state-run oil company said crude output fell about 10 percent in the second quarter, adding to tensions after Iran reportedly tested a medium-range ballistic missile in the Persian Gulf region.
“The market is leaning into the upside, probably pricing in a little more geopolitical risk premium,” said Phil Flynn, a senior markets analyst at Price Futures Group Inc. “People are going to be hesitant to be short over the weekend with all the Middle East tensions.”
However, crude remains down almost 4 percent for the month amid fears about sluggish demand growth.
The US Department of Commerce on Friday said GDP expanded by an annualized 2.1 percent in the second quarter of the year as trade disputes sapped exports and business investment.
Growth was down from the first quarter, although still better than forecast.
“The headline number looks okay, but the underlying statistics reflect the weakness,” said Cailin Birch, a global economist at the Economist Intelligence Unit in London.
“It’s a sign that economic growth is definitely slowing, so the question is when do we start to feel the real pain?” Birch said.
West Texas Intermediate for September delivery closed up US$0.18 at US$56.20 a barrel, notching its fifth increase in six days on the New York Mercantile Exchange. The contract gained 0.8 percent for the week.
Brent for September settlement gained US$0.07 to US$63.46 on the ICE Futures Europe Exchange, up 1.6 percent for the week.
Iran test-fired a ballistic missile that traveled 1,000km, escalating tensions after a series of attacks on tankers and drones in the Persian Gulf.
The missile did not pose a threat to shipping in the region, CNN Pentagon correspondent Barbara Starr said on Twitter, citing an unnamed US official.
While US crude stockpiles dropped by 10.8 million barrels in a report this week — offering another sign of shrinking supplies — the large decline was mostly attributed to the short-term impact of Hurricane Barry, which halted output from parts of the Gulf of Mexico.
US production slid the most since October 2017.
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