ANN/THE STAR – Oil prices eased on Friday but were set for their biggest weekly gain since October as positive United States (US) economic growth and signs of Chinese stimulus boosted fuel demand sentiment.
Brent crude futures were down 47 cents, or 0.57 per cent, to USD81.96 a barrel by 0715 GMT. US West Texas Intermediate crude fell 61 cents, or 0.79 per cent, to USD76.75.
The Brent benchmark was set to close 4.5 per cent higher for the week, while the US benchmark was set to rise 4.8 per cent. Both were on track for their second straight week of gains and the biggest weekly increase since the week ending October 13 after the start of the Israel-Hamas conflict in Gaza.
Prices slipped somewhat on Friday The Houthis are vowing to continue targeting ships linked to Israel until aid reaches Palestinians in Gaza, the group’s leader said on Thursday.
Previous interventions by US and United Kingdom forces in the Red Sea had not prevented attacks, leading investors to price in continued disruption, said market strategist at IG in Singapore Yeap Jun Rong.
Those disruption concerns are evident in the market structure of Brent futures. The premium of the first-month Brent future to the sixth-month contract rose to USD2.53 per barrel, the highest since November. This market structure, known as backwardation, when prompt prices are higher than later prices indicates traders are expecting supply tightness and stronger demand.
Demand sentiment improved after data on Thursday showed the economy of the US, the world’s biggest oil consumer expanded more quickly than expected in the fourth quarter.
