Oil rallied 3 percent on Friday, with U.S. crude futures headed for its largest weekly gain in seven years, after supply disruptions in Iraq and Nigeria and higher equity prices fueled by U.S. growth data.
Pipeline outages in Iraq and Nigeria have removed more than 800,000 barrels of crude oil per day from the market for at least the next two weeks. The disruptions should offset recent increases to supply from Iran, analysts said.
U.S. stock prices hit their highest in nearly two months after an upward revision to the country’s economic growth for the fourth quarter.A raft of other U.S. economic data also boosted Wall Street, which has traded in tandem with oil for weeks. [.N]
“Equities have been in a rally mode and with the technical picture for oil becoming bullish in the short term, we have a risk-on trade in crude,” said Chris Jarvis at Caprock Risk Management, an energy markets consultancy in Frederick, Maryland.
Brent crude LCOc1 was up $1.32 cents, or 3.8 percent, at $36.61 a barrel by 11:25 a.m. EST, having risen earlier to $37, its highest since Jan. 5. For the week, Brent was up 11 percent after rising for four days.
U.S. crude CLc1 rose 83 cents, or 2.5 percent, to $33.90 a barrel, after gaining almost $1.70 earlier. For the week, it was up 14 percent, rising without pause for five days for its steepest rise since January 2009.
Some analysts and traders were pricing oil higher in the near-term.
Hans Van Cleef, senior energy economist in Amsterdam for ABN Amro, said Brent’s break above the $36.25 technical resistance indicated “more short covering in the coming days”.
Jeffrey Grossman, dealer at New York’s BRG Brokerage, said he expected U.S. crude to trade at over $40 by end of March.
Investment bank Jefferies called current oil prices unsustainable, saying output declines among key non-OPEC producers will likely spark price recovery by second half 2016.