On Thursday, oil prices remained on track for weekly gains, with Brent and U.S. crude both up more than 6%, heading for a third weekly gain.
The gains were attributed to further production cuts by OPEC+ and a drop in U.S. oil inventories, which overshadowed fears over global economic growth.
Despite the bullish momentum, crude dipped on Thursday due to weak U.S. economic data, which raised concerns over economic growth. The slowdown in the U.S. services sector in March and the drop in U.S. job openings in February contributed to this concern.
However, according to Stephen Brennock of oil broker PVM, “the oil market’s bullish momentum may have paused, but upside potential remains given the tightening supply backdrop.”
Brent crude fell by 0.4% to $84.65 a barrel, while West Texas Intermediate U.S. crude dipped by 0.4% to $80.32. The strengthening of the U.S. dollar index, rebounding from a recent two-month low, also contributed to the dip in oil prices.
“A slowdown in the U.S. economic outlook is weighing on the upside on U.S. oil prices, however we continue to expect a further uptick in oil prices to the end of the quarter,” National Australia Bank analysts Baden Moore and Adam Skelton expected.
The snapshot of U.S. supply this week showed that crude inventories fell by a more than expected 3.7 million barrels, while gasoline and distillate inventories also declined, hinting at rising demand. These factors are also underpinning the market.
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