Oil edged higher for a fifth day on Friday amid optimism that the market is not in such bad shape.
Futures climbed 1 percent in New York, pushing prices to a weekly gain of 5.2 percent.
The International Energy Agency (IEA) said that demand is climbing faster than initially estimated and the US government reported declining stockpiles last week.
Kuwait’s OPEC governor said crude inventories would drop at a faster pace.
Meanwhile, Royal Dutch Shell PLC was forced to curb flows of crude from Nigeria after a pipeline shut.
“There were certainly some bullish elements in the market this week for the first time it seemed like in a while,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. The IEA saying that supply is a problem, yet demand is picking up was “a pillar of strength that we hadn’t gotten in a while.”
While oil rallied this week, prices in New York have lingered below US$50 per barrel amid concerns that elevated global supplies will offset cuts by OPEC and its partners as part of a deal to help rebalance the market.
The group’s output last month climbed to the highest this year as members exempt from the deal — Nigeria and Libya — pumped more and others slipped in delivering their pledged curbs.
West Texas Intermediate (WTI) for August delivery added US$0.46 to settle at US$46.54 per barrel on the New York Mercantile Exchange, the highest close since July 3. The contract is up 5.2 percent for the week. Total volume traded was about 19 percent above the 100-day average.
Brent for September settlement on Friday climbed US$0.49 to end the session at US$48.91 per barrel on the London-based ICE Futures Europe exchange. Prices are up 4.7 percent this week. The global benchmark traded at a premium of US$2.16 to September WTI.
Gasoline futures for August delivery rose 2.3 percent to settle at US$1.5605 per gallon, the highest since June 2.
Shell’s Nigerian unit declared force majeure, a legal clause enabling the suspension of deliveries, on flows of the country’s Bonny Light exports following the shutdown of the Nembe Creek Trunk Line.
Both Bonny Light and Djeno, two West African grades that have been put under force majeure, were scheduled to ship almost 403,000 barrels per day this month, loading programs compiled by Bloomberg showed.
Shale drillers in the US added two oil rigs for a total of 765, Baker Hughes Inc data showed on Friday.
OPEC and non-OPEC nations are showing greater compliance to their agreement to cut production, Kuwait’s OPEC governor Haitham al-Ghais said.
The IEA raised estimates for global oil demand growth this year by about 100,000 barrels per day to 1.4 million, the strongest in two years.
US crude inventories slid by 7.56 million barrels last week, the most since September last year, data from the Energy Information Administration showed on Wednesday.
The rise in prices this week is also a “reflection of some relatively bullish inventory draws,” Stewart Glickman, an energy equity analyst at CFRA Research in New York, said by telephone. “We’re in the US$46 range. It’s nothing to write home about exactly, but it’s certainly better than US$42.”
Oil market news:
‧ Magellan Midstream Partners LP plans to resume normal operations on its Longhorn crude pipeline early next week, the company said in a statement.
‧ OPEC would hurt itself and help US shale producers if it adopted deeper cuts, Qatar’s former minister of oil said.
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