NEW YORK- Oil prices jumped about 4 percent to a five-week high, lifted again by an OPEC+ decision this week to make its largest supply cut since 2020 despite concern about a possible recession and rising interest rates.
Oil rallied for the fifth day in a row even as the dollar moved higher after data showing the US economy was creating jobs at a strong pace gave the Federal Reserve a reason to continue hefty interest rate hikes.
A strong greenback can pressure oil demand, making dollar-denominated crude more expensive for other currency holders.
Brent futures rose $3.50, or 3.7 percent, to settle at $97.92 a barrel, while US West Texas Intermediate (WTI) crude rose $4.19, or 4.7 percent, to end at $92.64.
That was the highest close for Brent since Aug. 30 and WTI since Aug. 29. The price jump pushed both benchmarks into technically overbought territory for the first time since August for Brent and June for WTI.
Both contracts posted their second straight weekly gains, and their biggest weekly percentage gains since March this week, with Brent was up about 11 percent and WTI 17 percent higher.
US heating oil futures jumped 19 percent this week to their highest close since June, boosting the heating oil crack spread – a measure of refining profit margins – to its highest close on record, according to Refinitiv data going back to December 2009.
The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, agreed this week to lower their output target by 2 million barrels per day.
“Among the key ramifications of OPEC’s latest cut is a likely return of $100 oil,” said Stephen Brennock of oil broker PVM.
UBS Global Wealth Management also projected Brent would “move above the $100 bbl mark over the coming quarters.”
The OPEC+ cut comes ahead of a European Union embargo on Russian oil and will squeeze supply in an already tight market.
