© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019. REUTERS/Angus Mordant/File Photo
By Nicole Jao
NEW YORK (Reuters) -Oil prices rose over 3% on Friday, as investors took profits after prices slumped to four-month lows during the previous session, while U.S. sanctions on some Russian oil shippers lent some support.
futures rose $2.75, or about 3.6%, to $80.17 a barrel by 12:00 p.m. (1700 GMT). U.S. West Texas Intermediate crude (WTI) was at $75.37, up $2.47, or 3.4%.
“You’re getting a natural profit-taking rebound and short covering, to a degree,” said John Kilduff, partner at Again Capital LLC in New York.
Supporting prices on Friday was news that the U.S. imposed sanctions this week on maritime companies and vessels for shipping Russian oil sold above the Group of Seven’s price cap, potentially limiting oil supply.
Both benchmarks were on track still for their fourth straight week of losses, with WTI set to fall about 2.3% and Brent 1.6%.
A steep rise in inventories and a sustained record level of production triggered the oil market’s decline this week, while China’s deepening property crisis and slowing industrial growth also weighed.
“Demand growth from China has been falling short of expectations,” said Andrew Lipow, president of Lipow Oil Associates.
The precipitous drop on Thursday had some analysts questioning whether the selloff was overdone, particularly in light of escalating tensions in the Middle East that could disrupt oil supplies and the U.S. vowing to enforce sanctions against Hamas-backer Iran.
With Brent below $80 a barrel, a barrage of analysts now expect OPEC+, principally Saudi Arabia and Russia, to extend their voluntary cuts into 2024.
“Oil prices are down slightly this year despite demand exceeding our optimistic expectations,” Goldman Sachs analysts said in a note.
“Non-core OPEC supply has been much stronger than expected, partly offset by OPEC cuts.”
For 2023, the United States, which makes up two-thirds of non-OPEC+ growth, is forecast to deliver annual gains of 1.4 million barrels per day (bpd), according to the International Energy Agency (IEA).
Meanwhile, inflation in the euro zone appears to be thawing. On Friday, the EU’s statistics office confirmed annual inflation slowed sharply.