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Data on Thursday showed the economy of the U.S., the world's
biggest oil consumer, expanded more quickly than expected in the
fourth quarter. Also this week, China, the second-largest user,
announced a deep cut to bank reserves to spur economic growth.
Brent crude futures were down 46 cents, or 0.6%, to $81.97 a
barrel by 0907 GMT. U.S. Thursday's intra-day high of $82.57 is
the highest price of the year so far. West Texas Intermediate
crude was down 49 cents, or 0.6%, at $76.87.
"The economy remarkably weathered the storm caused by past rate
rises and it remains ebullient at the beginning of 2024," said
Tamas Varga at oil broker PVM regarding the United States,
adding that the Chinese reserves cut is "another welcome
development".
For the week, Brent was set to rise 4.3%, while the U.S.
benchmark was heading for a 4.7% gain. Both were on track for a
second straight weekly rise and their biggest weekly increase
since the week ending Oct. 13 after the start of the
Israel-Hamas conflict in Gaza.
Prices slipped on Friday on the prospect that oil shipping
disruptions in the Red Sea may ease as Chinese officials have
asked Iran to help rein in attacks on ships by the Iran-backed
Houthis, or risk harming business relations with Beijing.
Still, previous interventions by U.S. and UK forces in the Red
Sea did not prevent attacks, leading investors to price in
continued disruption, said Yeap Jun Rong, a market strategist at
IG in Singapore.
Supply concerns are evident in the structure of Brent futures.
The premium of the first-month contract to the sixth rose to
$2.58, the highest since November. This structure indicates a
perception of tighter prompt supply.
Oil was also boosted this week by a larger-than-expected
drawdown in U.S. crude stockpiles, and by concern of fuel supply
disruption after a Ukrainian drone attack on an export-oriented
oil refinery in southern Russia.
(Additional reporting by Arathy Somasekhar in Houston and Andrew
Hayley in Beijing; editing by Jason Neely)
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