Oil prices rise over 2% as U.S. inventories decline
OPEC+ impasse fuels uncertainty over global supply
New York: Oil prices rose for a second day on Friday as the market reacted to falling US inventories, and signs of strong Asian demand from both China and India added support.
Brent crude oil futures were up $1.43, 1.93%, at $75.55. U.S. West Texas Intermediate futures were up $1.62, or 2.2%, at $74.56.
"The market is coming to grips with the historic drop in U.S. oil inventories, and dimmed prospects of Iranian oil returning to the market," said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Still, prices on both sides of the Atlantic ended the week little changed, despite significant daily fluctuations. Prices were weighed down early in the week by the collapse of output talks between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+.
US crude and gasoline stocks fell and gasoline demand reached its highest since 2019, the U.S. Energy Information Administration said on Thursday, signalling increasing strength in the economy.
"A bullish EIA stock report helped the oil market rebound into the black," said Stephen Brennock of oil broker PVM.
"Clearly, U.S. oil markets are tight. However ... the only way to prevent further losses is for the threat of an OPEC+ price war to be contained," he added.
Gains in oil prices were capped by worries that members of the OPEC+ group could be tempted to abandon output limits that they have followed during the COVID-19 pandemic.