Oil prices edge up on strong U.S. economic data, Chinese demand hope

Oil prices edged marginally higher on Friday, extending for a second session on strong U.S. economic data and strengthening hope that the reopening of the Chinese economy would boost demand.

Brent futures gained 30 cents, or 0.3%, to $87.66 a barrel by 0113 GMT, while U.S. crude rose 21 cents to $81.22 per barrel, a 0.3% gain.

Both benchmarks had gained more than 1% on Thursday. Brent was on track to post its second weekly rise if gains held.

Improving gross domestic product and inflation data in the United States provided hope that the U.S. Federal Reserve could slow its pace of interest rate hikes, reducing fear of curtailment in economic activity and consequent oil demand.

Meanwhile, critically ill COVID-19 cases in China are down 72% from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped 79% from their peak, the Center for Disease Control and Prevention said earlier this week. The figures point to the normalisation of China’s economy, thereby boosting expectations of a recovery in oil demand.

Crude prices were also supported by strong demand for jet fuel and diesel as supplies remain tight. Also, the European Commission is proposing the European Union set a $100 per barrel price cap on premium Russian oil products such as diesel and a $45 per barrel cap on discounted products such as fuel oil, EU officials said on Thursday.

The gains, particularly on U.S. crude, were however limited by a 4.2 million barrel build in stocks at Cushing, the pricing hub for NYMEX oil futures, earlier this week.