Oil prices edged higher last Friday, reaching new two-month highs and posting the strongest weekly percentage gains this year as investors saw the oil glut easing.
U.S. West Texas Intermediate (WTI) crude futures ended Friday’s session up 67 cents, or 1.4%, to $49.71 a barrel. It rose 8.6% for the week.
Brent crude futures were up $1.01, or 2%, at $52.50/Bbl by 2:34 p.m. (1834 GMT), rising more than 9% for the week, Kallanish Energy learns.
The front of the crude oil curve jumped into backwardation, with the month-ahead trading above the subsequent month, showing investors are not expecting recent gains to last, Reuters reported. Brent also broke above its 200-day moving average, a key technical level, for the first time since May 30.
U.S. crude and gasoline inventories fell much more steeply than expected this week and the world’s biggest oil exporter Saudi Arabia said it would further reduce oil output in August.
“Positive signs came from the draw in gasoline stocks this week, as the U.S. moves into the peak driving season,” Ashley Kelty, oil analyst at Cenkos Securities, told Reuters.
U.S. crude stocks fell sharply by 7.2 million barrels in the week to July 21 due to strong refining activity and an increase in exports, according to data from the Energy Information Administration.
U.S. crude oil production has been on the rise since mid-2016,but it dropped to 9.41 million barrels per day (MMBPD) in the week ended July 21, from 9.43 MMBPD the week before. The decline was mainly due to a fall in Alaskan output, ANZ bank told Reuters.
Oil prices have been supported by a further agreement reached between OPEC and some non-OPEC members to limit Nigerian oil output and encourage several members to comply with their pledged production cuts.
Saudi Arabia said it planned to cap crude exports to 6.6 MMBPD in August, about 1 MMBPD below the level last year.