Singapore: Oil rose for a seventh session to a one-year high above $78 a barrel on Friday, after an unexpectedly steep drop in US oil product stocks and further weakness for the dollar.
Year highs for US stocks also helped oil power towards its best week of gains in nearly two months, even though investors were disappointed by results from top US banks Goldman Sachs and Citigroup.
The release of US September industrial production and capacity utilisation data, and a report on consumer sentiment for October, will offer more insight into the strength of the world’s largest economy and top oil user.
US crude for November delivery rose 48 cents to $78.06 a barrel by 0215 GMT, after settling $2.40 higher at $77.58 on Thursday. London Brent crude was up 40 cents at $76.63.
Oil is headed for a gain of 8.75% this week, and is its longest winning streak since July, but there are some worries about how long the rally can be sustained.
“A correction is on the cards. I would expect profit taking to set in next week, and oil to retreat to the mid- to low-$70s,” said Ben Westmore, commodities analyst with the National Australia Bank.
“Fundamentals remain weak. Global inventories are still pretty high, and unless we see the supply overhang being worked off, an oil price in the high-$70s is really not justified.”
Oil’s 3.2% gain on Thursday came after US Energy Information Administration data showed gasoline inventories fell by 5.2 million barrels last week, against analyst expectations for an increase. Distillate stockpiles also fell unexpectedly, while crude stocks rose 400,000 barrels, smaller than the forecast of a 700,000-barrel build.
Stronger US weekly jobless claims suggested the job market might be stabilising, which together with positive earnings results pushed the dollar to a 14-month low against the euro on Friday.
After results from JPMorgan and Goldman Sachs earlier this week, earnings from Bank of America and General Electric are due on Friday.
Industrial production and capacity utilisation data for September is expected to show a 0.2% rise in production, while the Reuters/University of Michigan Surveys of Consumers will release its October preliminary consumer sentiment index.