Oil price rises on strong growth in China and Middle East conflict, Brent crude at $84.24/bbl

Oil prices rose on Friday, extending their upward trajectory fueled by positive indicators of economic improvement in China. In addition, ongoing negotiations to ease tensions between Israel and Hamas, which have so far yielded no results, have contributed to the upbeat sentiment in the market.

Brent futures were up 37 cents, or 0.4 percent, at $84.24 a barrel, while U.S. West Texas Intermediate crude was up 41 cents, or 0.5 percent, at $79.64 dollars at 0003 GMT.

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The previous session also saw oil prices rise to a one-week high, supported by reports of increased Chinese crude imports during April. Moreover, investors interpreted the cooling of the US labor market as a potential signal for future interest rate cuts, further boosting oil prices.

“Crude oil prices are likely to see some consolidation moves this week with too many important data lined up, the focus of which will be the monthly reports from OPEC and the International Energy Agency (IEA) and the weekly oil inventory data from US from EIA – for indications on supply/demand equation,” said Pranav Mer, VP – Research (Commodity & Currency) BlinkX and JM Financial.

What is weighing on the price of crude oil?

• In April, China’s exports and imports returned to growth territory after contracting the previous month, indicating a positive shift in demand.
• San Francisco Federal Reserve President Mary Daly expressed significant uncertainty about the future direction of inflation in the United States during her remarks on Thursday. Despite this uncertainty, she remains confident that price pressures are gradually easing. Daly refrained from speculating on whether he thinks the US central bank will opt to cut interest rates later this year. However, financial markets anticipate that the US central bank will begin its easing cycle in September.

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• On Thursday last week, according to Palestinian residents, Israeli forces launched airstrikes on parts of Rafah, even as Prime Minister Benjamin Netanyahu rejected US President Joe Biden’s warning to withhold weapons from Israel in case of attacks on the southern Gaza city.
• A senior Israeli official confirmed late Thursday that the latest round of indirect negotiations in Cairo aimed at ending hostilities in Gaza had ended. Despite this, Israel has indicated that it will continue its planned military operation in Rafah and other areas of the Gaza Strip.