Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Crude prices up over 2% on rising U.S. oil demand and lower output

Published 04/27/2023, 10:08 PM
Updated 04/28/2023, 03:20 PM
© Reuters. FILE PHOTO: An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken on November 12, 2021.  Mandatory credit Kyodo/via REUTERS

By Scott DiSavino

NEW YORK (Reuters) -Oil prices mostly 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 $1.17, or 1.5%, to settle at $79.54 a barrel, while the more actively traded July contract jumped 2.7% to settle at $80.33.

U.S. West Texas Intermediate (WTI) crude rose $2.02, or 2.7%, to settle at $76.78.

Despite the daily gains, Brent and WTI both declined for a second week in a row, with Brent posting a fourth straight monthly decline as disappointing U.S. economic data and uncertainty over interest rates 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 (NYSE:FRC), 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).

EIA data this week showed U.S. crude oil and gasoline inventories fell more than expected last week as demand for the motor fuel picked up ahead of the peak summer driving season.

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]

Supply of the five North Sea crude oil grades underpinning the dated Brent benchmark will average about 607,000 bpd in June, compared with 696,000 bpd in May, implying a 13% fall, loading programs showed.

Oil companies Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) have enjoyed strong demand and held the line on cost-cuts implemented during COVID-19 lockdowns.

Crude prices have declined in recent weeks and months due to worries that interest rate hikes that could reduce demand.

Brent declined about 3% this week after falling about 5% last week, while WTI slid about 1% this week after losing about 6% last week.

© Reuters. FILE PHOTO: An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken on November 12, 2021.  Mandatory credit Kyodo/via REUTERS

For the month, Brent slid less than 1% in April, while WTI gained about 1%. That was the first monthly increase in WTI prices in six 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.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.