Oil prices up as world’s top consumers boost demand

© Reuters. FILE PHOTO: Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area near Long Beach, California July 30, 2013. REUTERS/David McNew/File Photo/

By Katya Golubkova

TOKYO (Reuters) – Oil prices rose on Friday, driven by growing demand in the United States and China, the world’s biggest oil consumers, and as the U.S. Federal Reserve gave a positive signal on possibility of rate cuts.

Brent crude futures were up 0.45%, or 37 cents, at $83.32 a barrel at 0110 GMT. U.S. West Texas Intermediate crude futures rose 0.61%, or 48 cents, to $79.44.

Data released by Energy Information Administration showed that U.S. gasoline inventories fell by 4.5 million barrels last week, and distillate stockpiles were down by 4.1 million barrels. Both fell more than expected in a sign of a strong demand.

“With the U.S. driving season just in the horizon, the market could get even tighter in coming weeks,” ANZ Research said in a note.

In China, imports of crude oil rose 5.1% in the first two months of 2024 from a year earlier, and India’s fuel consumption increased 5.7% year-on-year in February amid strong factory activity in the world’s third-biggest oil importer and consumer.

After accounting for the extra day in February this year, crude oil imports in China were up by 3.3% in annual terms, Capital Economics said in a note, in line with expectations of a demand increase for the year.

“But that growth will be substantially lower than in 2023 when the end of zero-covid restrictions led to a surge in activity in the transport and travel sectors,” the note said.

Providing additional support to oil prices, Federal Reserve Chair Jerome Powell said on Thursday that the U.S. central bank was “not far” from gaining enough confidence that inflation is faling to begin cutting interest rates.

In Canada, TC Energy (NYSE:TRP)’s Keystone oil pipeline resumed service on Thursday after going offline and temporarily restricting a major conduit of Canadian oil to the United States – one of the factors supporting prices in the previous session.