Crude prices up over 2% on rising U.S. oil demand and lower output

Tokyo, April 30 (BNA): Oil prices mostly rose by more than 2% on Friday after energy companies reported positive profits and US data showed a decline in crude production while demand for fuel was growing.

On the last day as a forward month, Brent crude futures for June delivery rose $1.17, or 1.5%, to settle at $79.54 a barrel, while the most heavily traded July contract jumped 2.7%, to settle at $80.33.

US West Texas Intermediate crude rose $2.02, or 2.7%, to settle at $76.78, Reuters reported.

Despite the daily gains, Brent and WTI fell for the second week in a row, with Brent crude posting a fourth straight monthly decline as disappointing US economic data and uncertainty about interest rates weighed on the demand outlook.

“The market fell most days of the week on fears of a looming recession and an expansion of the banking crisis with the First Republic,” said Phil Flynn, an analyst at Price Futures Group.

“But, today there were headlines showing there might be a solution to the First Republic problem, and there was data indicating increased demand for oil and declining production,” Flynn said.

U.S. officials are coordinating urgent talks to bail out First Republic Bank as private sector efforts led by the bank’s advisers reached no agreement, according to three sources familiar with the situation.

Sources said the US Federal Deposit Insurance Corporation (FDIC), the Treasury Department and the Federal Reserve are among government agencies that have begun organizing meetings with financial firms about a solution for First Republic.

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US crude production fell in February to 12.5 million barrels per day, the lowest level since December. Fuel demand rose to nearly 20 million barrels per day, the highest level since November, according to the Energy Information Administration (EIA).

US Energy Information Administration data this week showed US crude oil and gasoline inventories fell more than expected last week as demand for motor fuels rose ahead of the peak summer driving season.

Energy services company Baker Hughes said the number of rigs drilling for oil in the United States was unchanged this week at 591, but fell by one in April in its fifth monthly decline.

And the loading programs showed that the five North Sea oil supplies that support the Brent benchmark will average about 607 thousand barrels per day in June, compared to 696 thousand barrels per day in May, which means a decrease of 13%.

Oil companies Exxon Mobil Corp and Chevron Corp enjoyed strong demand and kept the cost cuts implemented during the COVID-19 lockdowns.

Crude oil prices have fallen in recent weeks and months on concerns that higher interest rates may reduce demand.

Brent crude fell about 3% this week after dropping about 5% last week, while WTI fell about 1% this week after losing about 6% last week.

For the month, Brent crude fell less than 1% in April, while WTI gained about 1%. This was the first monthly increase in WTI prices in six months.

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US consumer spending was unchanged in March, but continued strength in underlying inflation pressures could prompt the Federal Reserve to raise interest rates again next week to slow inflation, fueling fears of a potential recession.

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