Investing.com– Oil prices rose slightly in Asian trade on Friday and were set for a positive end to the week amid bets on tighter supplies and persistent geopolitical unrest in the Middle East.
But gains were tepid with traders on edge ahead of key U.S. inflation data due later in the day, which is set to offer more cues on the path of interest rates.
Brent oil futures rose 0.4% to $89.32 a barrel, while West Texas Intermediate crude futures rose 0.4% to $83.86 a barrel by 20:54 ET (00:54 GMT).
A drop in the dollar, following weak U.S. economic growth data, offered some relief to oil prices.
Oil prices set for weekly gains; M.East risks persist
Brent prices were trading up about 2% for the week, while WTI prices were set to add around 0.5%.
Prices rose in recent sessions as data showed overall U.S. inventories shrank more than expected in the past week, indicating some tightness in global oil markets.
Concerns over disruptions to Middle East supplies also remained in play as Israel stepped up its strikes against Gaza. While a war with Iran did not materialize, the Israel-Hamas conflict showed few signs of stopping.
The U.S. was also set to mobilize more military aid for Israel after President Joe Biden approved a bill earlier this week.
This kept some elements of risk premium in play for oil prices, helping them weather concerns of weaker demand and softening global growth.
Still, oil prices were trading well below five-month highs hit earlier in April, as a lack of immediate escalation in the Iran-Israel conflict saw traders price out some risk premium from crude.
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Oil shrugs off weak US data, PCE inflation awaited
Oil prices rose even as softer-than-expected U.S. gross domestic product data released this week raised concerns over slowing demand in the world’s biggest fuel consumer, as growth came under pressure from sticky inflation and high interest rates.
Signs of sticky inflation in the country added to these concerns, as a GDP price indicator for the first quarter read higher than expected.
Focus was now squarely on upcoming PCE price index data, due later on Friday. The reading is the Federal Reserve’s preferred inflation gauge, and is widely expected to factor into the central bank’s outlook on rates.
Oil prices saw some weakness as traders largely priced out expectations that the Fed will begin cutting interest rates by as soon as June.
