Oil prices, on Friday, July 28, surged , reaching fresh two-month highs and on track to post the strongest weekly gains this year as investors digested signs of an easing oversupply picture.
U.S. crude and gasoline inventories fell much more steeply than expected this week and the world’s biggest oil exporter Saudi Arabia said it would further reduce oil output in August.
Brent crude futures were up 22 cents at $51.71 a barrel at 0931 GMT after reaching a fresh two-month high of $51.75 a barrel. The front of the crude oil curve jumped into backwardation, with the month-ahead trading above the subsequent month, showing investors are not expecting recent gains to last.
U.S. West Texas Intermediate (WTI) crude futures were flat at $49.04 a barrel, near a two-month high of $49.24.
U.S. crude stocks fell sharply by 7.2 million barrels in the week to July 21 due to strong refining activity and an increase in exports, according to data from the Energy Information Administration (EIA).
Brimming U.S. crude supplies have been a challenge to production cuts to prop up prices led by the Organization of the Petroleum Exporting Countries, meaning weekly U.S. inventory data is closely watched.
Despite these signs, analysts’ assessments of the oil market remained bearish. Investors were eyeing an update on the U.S. rig count expected later on Friday to assess any signs of a slowing down in drilling activity, Reuters reports.
