Benchmark Brent above $84 on encouraging demand signals, Middle East conflict

The drop in U.S. crude inventories, driven by higher refinery runs, coincided with data released Thursday that showed China’s oil imports in April were higher than a year ago on signs of improving trade activity.

China’s exports and imports returned to growth in April after contracting the previous month.

“Ongoing signs of strengthening demand in China should see the commodity market remain well supported,” ANZ Research analysts said in a note.

The focus is also on US inflation data – due next week – which could affect the Federal Reserve’s interest rate policy path.

In Europe, a Ukrainian drone strike set fire to an oil refinery in Russia’s Kaluga region, state news agency RIA said on Friday, the latest salvo from Kiev in what has become a series of “tit-for- tat” on the energy infrastructure.

Meanwhile, conflict in the Middle East continues after Israeli forces shelled areas of the southern Gaza city of Rafah on Thursday, according to Palestinian residents, after the latest round of negotiations to end hostilities in Gaza failed.

As the conflict rages, so does the potential for a wider conflagration in the region, particularly the main backer of the Palestinian group Hamas, Iran, a key oil producer.

“Israel’s basis for an intervention in Rafah and rising tensions on its northern border are a reminder that geopolitical risks could persist at least through the second quarter of 2024,” Citi analysts said in a note.

However, the bank sees prices falling through 2024, with Brent averaging $86 a barrel in the second quarter and $74 in the third quarter, amid signs that rising global oil demand ” seems to be moderate”.

(Reporting by Natalie Grover in London, Katya Golubkova in Tokyo and Sudarshan Varadhan in Singapore; Editing by Stephen Coates and Mark Potter)

Disclaimer: This report is automatically generated by the Reuters news service. ThePrint assumes no responsibility for its content.

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