Crude Prices Up Over 2 Percent on Rising US Oil Demand and Lower Output

Last Updated: April 29, 2023, 01:36 IST

Crude prices have been lower in recent weeks and months due to uncertainty over further interest rate hikes that could reduce demand for oil. (Image: Reuters File)

U.S. West Texas Intermediate (WTI) crude rose $1.92, or 2.6%, to $76.68

Oil prices rose over 2% on Friday after energy firms posted positive earnings and U.S. data showed crude output was declining while fuel demand was growing.

On its last day as the front-month, Brent futures for June delivery rose $1.13, or 1.4%, to $79.50 a barrel by 1:54 p.m. EDT (1754 GMT). The more actively traded July contract was up about 2.8% at $80.40.

U.S. West Texas Intermediate (WTI) crude rose $1.92, or 2.6%, to $76.68.

Brent and WTI notched their second straight weekly declines, with a fourth straight monthly decline for Brent as disappointing U.S. economic data and uncertainty over further interest rate hikes weighed on the demand outlook.

“The market was down much of the week on worries about a looming economic recession and an expansion of the banking crisis with First Republic,” said Phil Flynn, an analyst at Price Futures Group.

”But, today there were headlines showing there may be a solution to the First Republic problem, and there was data pointing to a rise in oil demand and a decline in output,” Flynn said.

U.S. officials are coordinating urgent talks to rescue First Republic Bank, as private-sector efforts led by the bank’s advisers have yet to reach a deal, according to three sources familiar with the situation.

The U.S. Federal Deposit Insurance Corp (FDIC), the Treasury Department and the Federal Reserve are among government bodies that have started to orchestrate meetings with financial companies about a solution for First Republic, the sources said.

U.S. crude production fell in February to 12.5 million barrels per day (bpd), its lowest since December. Fuel demand rose to nearly 20 million bpd, its highest since November, according to the Energy Information Administration (EIA).

The number of rigs drilling for oil in the U.S. was unchanged this week at 591, but inched down by one in April in their fifth monthly decline, energy services firm Baker Hughes Co said. [RIG/U]

Oil companies Exxon Mobil Corp and Chevron Corp are riding a wave of strong demand and have held the line on cost-cutting implemented when fuel demand collapsed during COVID-19 lockdowns.

Crude prices have been lower in recent weeks and months due to uncertainty over further interest rate hikes that could reduce demand for oil.

For the week, Brent was on track to drop about 3% after falling 5% last week, and WTI was on track to drop about 1% after falling 6% last week.

For the month, Brent was down less than 1% and WTI was on track to rise about 1% in April after falling during the prior five months.

U.S. consumer spending was unchanged in March, but persistent strength in underlying inflation pressures could prompt the Fed to hike rates again next week to slow inflation, feeding fears of a possible recession.

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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)

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