Categories: Markets

Oil Heads for Fourth Weekly Gain on Signs of Market Tightening

(Bloomberg) — Oil headed for a fourth weekly gain amid signs global markets are tightening.

Brent futures advanced 0.6%% on thin trading volumes, holding above $80 a barrel in London. Russia has shown signs of ending crude oil exports as it belatedly honors an agreement with Saudi Arabia and the OPEC+ alliance to help balance world markets. Prices also strengthened as China, the world’s biggest crude importer, stepped up efforts to boost its flagging economic recovery.

Volumes tend to be low during the summer holiday season and traders are reducing their exposure to the crude oil markets, which is strongly suppressing open interest in West Texas Intermediate. The US benchmark is also on track for a fourth consecutive weekly increase.

Crude oil rose higher since late June on signs the market was tightening, but remained low for the year. China’s lackluster recovery is a major drag on demand, as is the Federal Reserve’s aggressive monetary policy.

The US central bank is expected to raise rates next week and the possibilities for a further step higher rose slightly after initial jobless claims data, released Thursday, pointed to continued strength in the labor market.

“Crude oil prices struggled for direction this week, amid a tug-of-war between a weak demand image and a supportive supply outlook,” analysts at consultants FGE said in a report. “Despite this week’s poor price performance, we remain cautious given the tightening supply outlook.”

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