Lower fears of recession boost oil prices

London — Oil prices rose as much as $1 on Friday as fresh US data lowered recession fears, although an upcoming speech from the US Federal Reserve chair capped further gains.

Brent crude futures climbed 73c, or 0.73%, to $100.07 a barrel by 8.25am GMT, while US West Texas Intermediate (WTI) crude futures rose 78c, or 0.84%, to $92.93.

Both contracts jumped by as much as $1 in early trade after slumping by about $2 on Thursday.

Better-than-expected figures concerning the US economy helped dispel fears that a recession was under way, putting the benchmark oil contracts on track for gains of about 3% for the week.

The US economy contracted at a more moderate pace than initially thought in the second quarter as consumer spending blunted some of the drag from a sharp slowdown in inventory accumulation.

Additional price support came from the prospect of oil cartel Opec curbing output to offset the return of Iranian barrels to oil markets should Tehran clinch a nuclear deal with the West.

On Friday, the United Arab Emirates became the latest Opec+ member to back a possible cut in oil production.

“The producer group is intent on safeguarding the $100/bbl price floor and as such, the downside potential appears limited,” PVM analyst Stephen Brennock said.

Tehran is reviewing Washington’s response to a EU-drafted final offer to revive a nuclear deal, with the EU expecting a response soon. It is unclear, though, how quickly Iranian oil exports would resume if a deal is reached.

The market awaits new signals on the outlook for rate hikes from a speech by US Federal Reserve chair Jerome Powell later on Friday.

“Fed policymakers have been making hawkish overtures of late, and this stance will likely be reiterated by Powell’s message,” Brennock said.

Reuters