Oil prices gained as much as $1 on Friday to continue the climb from the previous session, driven by a potential demand surge in China and data showing a drop in US fuel supplies following the winter storm at the end of 2022.
Brent crude futures were up 0.09% to $78.76 per barrel after rising 1% or $0.75 to $79.44 per barrel earlier. The global benchmark added $0.85 to $78.69 on Thursday.
The US West Texas Intermediate (WTI) crude futures soared 0.1% to $73.75 per barrel, having traded 1% or $0.75 higher to $74.41 earlier in the session. The US oil benchmark surged $0.83 to $73.67 in the prior session.
Still, oil prices are expected to end lower on a weekly basis, with Brent and WTI stumbling about 7% a week earlier. Fears of a global recession have weakened sentiment, while demand concerns are limiting gains.
China Demand Boost, EIA Reports US Fuel Stocks Drop
Oil prices found support on Friday mainly on China’s reopening optimism, particularly additional state support measures to strengthen the property sector, which raised the possibility of higher demand in the world’s biggest importer in the coming year.
A softer US dollar also helped shore up optimism in the oil markets.
China announced on Thursday more stimulus measures, including implementing a dynamic adjustment mechanism for first-home mortgage rates, to pick up its financially struggling real estate sector, which represents a quarter of its economy.
The country has decided to ease its strict COVID lockdown measures, although the move has resulted in a resurgence of COVID-19 cases across China.
Transport officials stated on Friday that the overall number of passenger trips via road, rail, water, and during the upcoming Lunar New Year is estimated at 2.1 billion this year, a twofold increase to the 1.05 billion reached in the same period of 2022.
Daily passenger flights booked in the holiday season starting Saturday were around 73% of pre-pandemic levels in 2019.
Pushing crude prices up also was data from the Energy Information Administration (EIA) that showed distillate stocks, which include diesel and heating oil, declining 1.4 million barrels in the week to December 30. The figures were above forecasts of a 396,000-barrel draw.
Distillate consumption is typically higher during the winter season in the northern hemisphere due to solid heating demand.
Meanwhile, the EIA reported that US gasoline inventories fell 346,000 barrels last week, less than the 486,000-barrel slide expected.
