By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices held steady on Friday but were heading for a second weekly gain as positive U.S. economic growth and signs of Chinese stimulus boosted demand sentiment, while Middle East supply concerns added further support.
The United States, the world’s biggest oil consumer, registered faster than expected economic growth in the fourth quarter, data showed on Thursday. Oil demand sentiment was also buoyed this week by China’s latest measures to boost growth.
Brent crude futures were down 9 cents at $82.34 a barrel by 11:13 a.m. ET (16:13 GMT), having set their highest price so far this year with an intra-day peak of $82.80.
U.S. West Texas Intermediate crude was down 23 cents, or 0.3%, at $77.13.
“Economic stimulus from China, stronger-than-expected 4Q GDP growth in the U.S., cooling U.S. inflation data, ongoing geopolitical risks, and the larger-than-expected 9.2 million barrel drop in U.S. commercial crude stocks for last week have all combined to wedge prices higher,” said Tim Evans, an independent oil analyst, adding that he does not see a case for an extended uptrend.
Brent crude and the U.S. benchmark were set for weekly gains of about 5%. Both were on track for their biggest weekly increase since the week ending Oct. 13 after the start of the Israel-Hamas conflict in Gaza.
Prices dipped on Friday on hopes that oil shipping disruptions in the Red Sea could ease after Chinese officials asked Iran to help rein in attacks on ships by the Iran-aligned Houthis or risk harming business relations with Beijing.
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.
The United States risks some exposure to China’s economic slowdown and shipping disruptions in the Red Sea, but they appear contained, the White House National Economic Council director said on Friday, adding that the U.S. economy is “upbeat.”
Oil was also boosted this week by a larger than expected drawdown in U.S. crude stockpiles and a potential fuel supply disruption after a Ukrainian drone attack on an export-oriented oil refinery in southern Russia.
OPEC+ will likely decide its oil production levels for April and beyond in the coming weeks, OPEC+ sources said, adding that a meeting of a key ministerial panel next Thursday would take place too early to make decisions on further output policy.
Supply concerns are evident in the structure of Brent futures. The premium of the first-month contract to the sixth on both Brent and WTI rose to their highest since November, indicating a perception of tighter prompt supply.
(Reporting by Arathy Somasekhar and Georgina McCartney in Houston; Additional reporting by Andrew Hayley in Beijingand Alex Lawler in London; Editing by David Goodman, Kirsten Donovan and Bill Berkrot)
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