Singapore: Crude oil rallied 0.5% above $72 a barrel on Friday, extending the previous session’s 0.9% gain on positive demand expectations and inventory data.
Crude prices, up for the fifth straight session and having risen over 6% so far this week, are underpinned by a series of supportive fundamental data and a weaker dollar.
China’s crude oil imports in August surged about 25% on the year to a near record high of 19.6 million tonnes, or around 4.6 million barrels per day, Reuters calculations based on official customs data showed.
Imports for the first eight months rose 7.4% year on year to 130 million tonnes.
The International Energy Agency raised its demand outlook and the US Energy Information Administration reported crude inventories fell 5.9 million barrels last week, four times greater than forecast in a Reuters poll.
“A lot of the information that came out on Thursday was pretty bullish for oil but the price reaction was muted,” said David Moore, commodities strategist at Commonwealth Bank in Sydney.
“That is probably because we are back towards the higher end of the trading range and it’s making making people a bit cautious,” he said.
Nymex crude for October delivery stood at $72.31 a barrel by 0228 GMT, up 37 cents from Thursday’s settlement. Prices are on track for the biggest weekly rise since the middle of August.
London Brent crude rose 57 cents to $70.43 a barrel.
Equities markets continued their run higher, also supporting energy. In the past two months equities and oil have shown a very tight correlation.
The dollar remained weak versus the euro, trading just short of $1.46 and the dollar index against a basket of currencies fell to its lowest in a year.
The weakening greenback -- down 2% this week -- has driven buying in dollar denominated assets like oil, but Moore said although further dollar weakness was likely, it would have a less pronounced influence on prices.
“Our forecast for currencies is for dollar depreciation -- a lot of that has occurred already and while depreciation has been an upside driver, that influence may be weakening,” Moore said.
More gains in crude could be on the cards, with a possible challenge of the late August high of $75 a barrel, said Peter McGuire, managing director of Commodity Warrants Australia, saying this is a level Opec would be happy with.
“Opec wants to see oil between $70 and $85, and what Opec wants, Opec gets. If you want to play ball they are the only game in town and remember they own the pitch, the bat, the ball, the umpire and even the hotdog concession.”
Opec left output unchanged after a meeting that ended late on Wednesday, but signalled it would push for greater compliance with the 4.2 million barrels per day that the group had agreed at a series of meetings previously.