© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian/File Photo
By Alex Lawler
LONDON (Reuters) – Oil on Friday was trading near a 2024 high and heading for a second weekly gain as positive U.S. economic growth and signs of Chinese stimulus boosted demand sentiment, while Middle East supply concerns added further support.
Data on Thursday showed the economy of the U.S., the world’s biggest oil consumer, expanded more quickly than expected in the fourth quarter. Also this week, China, the second-largest user, announced a deep cut to bank reserves to spur economic growth.
futures were down 46 cents, or 0.6%, to $81.97 a barrel by 0907 GMT. U.S. Thursday’s intra-day high of $82.57 is the highest price of the year so far. West Texas Intermediate crude was down 49 cents, or 0.6%, at $76.87.
“The economy remarkably weathered the storm caused by past rate rises and it remains ebullient at the beginning of 2024,” said Tamas Varga at oil broker PVM regarding the United States, adding that the Chinese reserves cut is “another welcome development”.
For the week, Brent was set to rise 4.3%, while the U.S. benchmark was heading for a 4.7% gain. Both were on track for a second straight weekly rise and their biggest weekly increase since the week ending Oct. 13 after the start of the Israel-Hamas conflict in Gaza.
Prices slipped on Friday on the prospect that oil shipping disruptions in the Red Sea may ease as Chinese officials have asked Iran to help rein in attacks on ships by the Iran-backed Houthis, or risk harming business relations with Beijing.
Still, previous interventions by U.S. and UK forces in the Red Sea did not prevent attacks, leading investors to price in continued disruption, said Yeap Jun Rong, a market strategist at IG in Singapore.
Supply concerns are evident in the structure of Brent futures. The premium of the first-month contract to the sixth rose to $2.58, the highest since November. This structure indicates a perception of tighter prompt supply.
Oil was also boosted this week by a larger-than-expected drawdown in stockpiles, and by concern of fuel supply disruption after a Ukrainian drone attack on an export-oriented oil refinery in southern Russia.