Oil climbs close to April peak on tighter supply
Oil climbed on Thursday, with Brent crude topping $84 a barrel for the first time since April, supported by supply tightness owing to OPEC+ production cuts and renewed optimism on the outlook for Chinese demand and global growth.
Crude has posted four consecutive weekly gains on an expected tightening of supply because of output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, as well as some involuntary outages.
Brent crude advanced 33 cents, or 0.4%, to $83.25 a barrel by 1340 GMT while U.S. West Texas Intermediate (WTI) crude rose 70 cents, or 0.9%, to $79.48. Intra-day peaks for both contracts were the highest since April 19.
"We see the oil market undersupplied," UBS analysts said in a report. "We retain a positive outlook and look for Brent to rise to $85–90 over the coming months."
Still, oil dropped on Wednesday after data showed U.S. crude inventories fell less than expected and the U.S. Federal Reserve raised interest rates by a quarter of a percentage point, leaving the door open to another increase.
"While the consensus broadly expects demand to exceed supply for the remainder of this year, oil prices themselves have so far refrained from providing a signal of such a fundamental trend," said Norbert Ruecker of Swiss bank Julius Baer.
Risk appetite in wider financial markets is being boosted by growing hopes that central banks such as the Fed are nearing the end of policy tightening campaigns, which would boost the outlook for global growth and energy demand.
The European Central Bank raised interest rates for the ninth consecutive time on Thursday and kept the door open to further tightening.
A pledge on Monday from China to boost policy support for the economy has spurred hopes of oil demand regeneration from the world's largest crude importer, Phillip Nova analyst Priyanka Sachdeva said in a note.
Coming into focus is an Aug. 4 meeting of key OPEC+ ministers to review the market.
