NEW YORK- Oil prices climbed about 3 percent to a nine-week high on Friday as supply concerns and technical buying outweighed fears that further interest rate hikes could slow economic growth and reduce demand for oil.
Brent futures rose $1.95, or 2.6 percent, to settle at $78.47 a barrel, while US West Texas Intermediate crude (WTI) rose $2.06, or 2.9 percent, to settle at $73.86.
That was the highest close for Brent since May 1 and WTI since May 24. Both benchmarks ended up about 5 percent for the week.
“We’re knocking on the door of a major breakout to the upside. I think you’re seeing some short covering here today … because a lot of people have been betting on the short side, said Phil Flynn, an analyst at Price Futures Group.
After two months of price consolidation between roughly $73-77, Brent moved into technically overbought territory for the first time since mid April.
“The rally over the last week or so … has been quite strong and backed by momentum – as well as fresh cuts from Saudi Arabia and Russia,” said Craig Erlam, a senior market analyst at OANDA.
Top oil exporters Saudi Arabia and Russia announced fresh output cuts this week bringing total reductions by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, to around 5 million barrels per day (bpd), or about 5 percent of global oil demand.
“OPEC+ production cuts are expected to tighten the market, driving supply deficits in the second half of 2023, supporting higher oil prices,” analysts at US financial services company Morningstar said in a note.
OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said. – Reuters
