Oil prices up 3% to 9-week high on supply concerns
By Scott DiSavino
NEW YORK (Reuters) -Oil prices climbed about 3% to a nine-week high on Friday as supply concerns and technical buying outweighed fears that further interest rate hikes could slow economic growth and reduce demand for oil.
Brent futures rose $1.95, or 2.6%, to settle at $78.47 a barrel, while U.S. West Texas Intermediate crude (WTI) rose $2.06, or 2.9%, to settle at $73.86.
That was the highest close for Brent since May 1 and WTI since May 24. Both benchmarks ended up about 5% for the week.
«We're knocking on the door of a major breakout to the upside. I think you're seeing some short covering here today… because a lot of people have been betting on the short side, said Phil Flynn, an analyst at Price Futures Group.
After two months of price consolidation between roughly $73-77, Brent moved into technically overbought territory for the first time since mid April.
»The rally over the last week or so… has been quite strong and backed by momentum — as well as fresh cuts from Saudi Arabia and Russia," said Craig Erlam, a senior market analyst at OANDA.
Top oil exporters Saudi Arabia and Russia announced fresh output cuts this week bringing total reductions by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, to around 5 million barrels per day (bpd), or about 5% of global oil demand.
«OPEC+ production cuts are expected to tighten the market, driving supply deficits in the second half of 2023, supporting higher oil prices,» analysts at U.S. financial services company Morningstar said in a note.
OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said.
Russia's latest pledge to reduce oil exports will not require a similar cut in
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