Oil prices lost around 5% during the week ending Feb. 2 as China's property sector faltered amid weak economic data, while escalating tension in and around the Red Sea and investor optimism about the US Fed’s interest rate policy boosted market sentiment to prop up prices.
International benchmark Brent crude traded at $78.97 per barrel at 15.11 p.m. local time (1211 GMT) on Friday, increasing by over 4.8% relative to the closing price of $82.95 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, traded at $74.06 a barrel at the same time on Friday, for a fall of around 5.1% from last Friday's session that closed at $78.01 per barrel.
Tensions escalated in the Red Sea amid Houthi attacks on commercial ships linked to Israel. Fears that the regional conflict will spill over to other countries in the Middle East and further disrupt supply routes supported price increases throughout the week.
Tensions escalated at the beginning of the week after the US military said it shot down a Houthi anti-ship ballistic missile in the Gulf of Aden.
On Sunday, the Jordanian government announced an attack on US forces at Tenef Base on the Syrian border. It was reported that three US soldiers were killed in the unmanned aerial vehicle attack.
However, expectations of a ceasefire in the Middle East limited the upward price trend. Hamas said it would abide by a court-issued ceasefire if Israel also complies.
-Fed decisions contribute to price increases
Expectations of the US economy making a 'soft landing' and news of the Fed putting an end to its rate hikes are fueling oil price gains, projecting a boost in the world’s largest oil-consuming country.
The US Fed on Wednesday decided to leave its interest rate policy unchanged at present, with hints that rates are 'likely' at their peak in the monetary tightening cycle.
Fed Chair Jerome Powell said that 'if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,' raising hopes of more oil demand.
However, data from the Energy Information Administration (EIA) showing bearish demand in the US dampened further price increases. US commercial crude oil inventories rose by around 2.1 million barrels to 421.9 million barrels, compared to the American Petroleum Institute's expectation of a fall of around 2.5 million barrels.
Gasoline inventories also rose by around 1.2 million barrels to 254.1 million barrels over the same period.
- China's demand outlook remains blurred
Weaker-than-expected economic data in China, the second-largest oil consumer in the world, disappointed investors after the Manufacturing Purchasing Managers' Index, which registered at 49.2 in January, below the growth threshold of 50 points, indicated the continuation of the previous quarter's economic contraction.
Demand woes in the country further increased after its largest real estate company, Evergrande, filed for bankruptcy.
However, the country eased concerns by releasing a stimulus package to support its property sector which aided price upswings.
By Basak Erkalan and Sibel Morrow
Anadolu Agency
energy@aa.com.tr