Crude oil gained more than $1 per barrel on Friday and ended the week higher, owing to renewed optimism about demand from China, the world’s largest oil importer.
Brent crude futures rose $1.08, or 1.3 percent, to $85.83 per barrel, while West Texas Intermediate (WTI) crude futures rose $1.52, or 1.9 percent, to $79.68 a barrel.
Both benchmarks closed at their highest levels since February 13th.
The release of new Chinese factory data suggested that activity was picking up, in line with expectations of a quick recovery from last year’s Covid lockdowns.
An official index published on Wednesday by China’s National Bureau of Statistics revealed that manufacturing activity expanded at the fastest rate in more than ten years.
The manufacturing purchasing managers’ index (PMI) rose to 52.6 in February from 50.1 in January, exceeding expectations as output increased following the lifting of COVID-19 restrictions in December last year.
In February, China’s service sector activity expanded at the fastest rate in six months.
As the US dollar fell, so did support. Based on this, analysts expect the dollar to fall in value over the next year, making dollar-denominated commodities like oil cheaper for holders of other currencies.
The market was put under pressure after a media report said the UAE was debating leaving the Organization of Petroleum Exporting Countries (OPEC) and pumping more oil.
The UAE is considering leaving OPEC due to a growing schism between longtime allies Saudi Arabia and the UAE, according to the Wall Street Journal, citing unnamed Emirati officials.
The UAE has long desired to increase its crude output in order to increase revenue but has been constrained by OPEC+ production agreements dominated by the group’s kingpin and largest producer, Saudi Arabia.
Later, Reuters reported that the report was “far from the truth” according to two sources with direct knowledge.
A possible exit from OPEC by the Gulf producer would be unsettling, especially since it comes within four years of two previous departures, Qatar in 2019 and Ecuador in 2020.
