Oil rises to $73 due to leaders' phone call and limited supply in the US
Oil briefly rose over $73 a barrel on Friday, supported by signs of increased supply shortages in the US as a result of Hurricane Ida and US-China trade prospects bolstered by risky assets.
About three-quarters of the US Gulf's offshore oil production, or about 1.4 million barrels per day, has stalled since the end of August. This amount is roughly equivalent to what OPEC member Nigeria produces.
Brent crude, which reached 73.15 per barrel during the session, rose $1.47, or 2.3%, to $72.92 per barrel. West Texas Intermediate (WTI) crude rose $1.58, or 2.3%, to $69.72.
Both indicators posted a small increase over the past week. Brent crude rose 41% this year as the Organization of the Petroleum Exporting Countries supply cuts and demand recovered from the pandemic.
Oil and stock markets also found support from the news of a phone call between US President Joe Biden and his Chinese counterpart, Xi Jinping. Analysts said the meeting raised hopes for warmer relations and more global trade. Biden-Xi call boosts stocks and aids sentiment.
The Biden-Xi phone call had a positive impact on oil markets, as it did on other asset classes.
Energy service provider Baker Hughes said the US added seven drilling rigs in the last week and production could increase in the coming weeks.
On Thursday, both crude oil contracts were down more than 1% after China said it would auction off its crude oil reserves to help alleviate higher raw material costs for refineries.
The market is focusing on tighter supply again globally, which is accelerating it. The decrease in production in the Gulf of Mexico is offset by the extraction of oil from China's strategic oil reserves
Next week, OPEC and the International Energy Agency are expected to see revisions to their 2022 oil demand outlook, with OPEC revising its forecasts on Monday.
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