Oil powers toward fifth weekly gain as market starts to tighten - BNN Bloomberg

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Oil headed for its longest run of weekly gains in more than a year on an improving macroeconomic outlook and signs of a tighter market.

West Texas Intermediate edged below US$80 a barrel Friday but has still rallied more than three per cent this week for a fifth consecutive gain. In the U.S., economic growth exceeded expectations, and there's speculation the Federal Reserve is near or at the end of its tightening cycle. Chinese authorities, meanwhile, have pledged more stimulus to support growth in the largest crude importer.

Crude holdings at the key U.S. storage hub in Cushing, Oklahoma, have declined by 7.5 million barrels during the past four weeks, pushing stockpiles to their lowest since May. That's helping support a widening of WTI's backwardation for its nearest two contracts, a bullish pricing pattern that has grown to its largest since November.

The rally in the US crude benchmark means that prices have all but erased the year's losses after OPEC+ linchpins Saudi Arabia and Russia both curbed exports, with Moscow reaffirming its commitment to those obligations this week. That's led banks, including Standard Chartered Plc and UBS Group AG, to forecast tightening global balances and higher prices for the rest of the year.

“The outlook has not changed; sentiment remains buoyant,” said Tamas Varga, an analyst at brokerage PVM. He added that prices are likely to revisit their highs for the year in coming months.It's up 3.7 per cent for the week.Russia reduced oil exports in July under commitments to OPEC+ and intends to do so again in August, Energy Minister Nikolai Shulginov said, according to a report from state-run news service Tass.

 

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