LONDON: Global benchmark Brent hovered above $84 a barrel on Friday after data this week signalled growing demand in the US and China, the two largest crude users in the world, while festering conflict in the Middle East added support.
Brent futures were up 51 cents to $84.39 a barrel at 0956 GMT. US West Texas Intermediate crude was up 57 cents to $79.83.
Falling US crude inventories spurred by higher refinery runs coincided with data released on Thursday showing China’s oil imports in April were higher than last year on signs of improving trade activity.
China’s exports and imports returned to growth in April after contracting in the previous month.
“Ongoing signs of strength in demand in China should see commodity market remain well supported,” ANZ Research analysts said in a note.
In Europe, a Ukrainian drone attack set an oil refinery in Russia’s Kaluga region on fire, RIA state news agency reported on Friday, the latest salvo from Kyiv in what has become a series of tit-for-tat attacks on energy infrastructure.
Meanwhile, conflict in the Middle East continues, after Israeli forces bombarded areas of the southern Gaza city of Rafah on Thursday, according to Palestinian residents, after the latest round of negotiations to halt hostilities in Gaza came to naught.
As the conflict rages, it increases the potential for a broader conflagration in the region, particularly Palestinian group Hamas’ main supporter Iran, a key oil producer.
“Israel’s groundwork for an intervention in Rafah and growing tensions on its Northern border are a reminder that geopolitical risks could persist through all of Q2 2024, at least,” Citi analysts said in a note.
Still, the bank sees prices easing through 2024, with Brent averaging $86 a barrel in the second quarter and $74 in the third quarter amid signs that global oil demand growth “appears to be moderating”.