Oil prices rose on Friday, buoyed by optimism surrounding trade negotiations, which improved the outlook for the global economy and future oil demand. This positive sentiment overshadowed concerns about a potential increase in supply from Venezuela.
Brent crude futures reached a one-week high of $69.47 a barrel in early trading and are trading 0.23 percent higher at $69.34 as of 5:00 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose 14 cents, or 0.21 percent, to $66.17 per barrel.
Easing trade tensions support demand outlook
Oil prices, along with global stock markets, found support from growing expectations of additional trade agreements between the U.S. and its key trading partners ahead of the August 1 deadline, when new U.S. tariffs on various countries are set to take effect.
The momentum was fueled by Wednesday’s announcement of a trade deal between the United States and Japan. Following that, two European diplomats indicated that the European Union is nearing an agreement with the U.S. that would include a baseline 15 percent tariff on EU imports, with potential exemptions for certain goods.
Venezuela’s oil supply to increase
The United States is preparing to permit partners of Venezuela’s state-run oil company, PDVSA, to resume limited operations in the sanctioned country, beginning with U.S. energy giant Chevron.
As a result, Venezuelan oil exports could rise by just over 200,000 barrels per day—a development that would benefit U.S. refiners by easing supply constraints in the heavier crude oil market.
Brent crude is up 0.4 percent so far this week, while U.S. West Texas Intermediate (WTI) has declined by 1.4 percent. Both benchmarks rose by about 1 percent on Thursday, supported by reports of reduced Russian gasoline exports.
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U.S. crude stockpiles dip
Adding further support to the market were declining U.S. crude stockpiles. Data from the U.S. Energy Information Administration released on Wednesday showed a larger-than-expected drawdown in crude inventories, which fell by 3.2 million barrels to 419 million barrels last week, double the 1.6 million barrel decrease analysts had forecasted.
Next week’s economic data from the world’s largest economies and top oil consumers will include key indicators such as factory activity in China, as well as U.S. figures on inflation, employment, and inventories. These releases are expected to offer further insight into global economic momentum and potential impacts on oil demand.
