TOKYO, (Reuters) – Oil prices surged more than 2% on Friday as energy companies reported strong results and U.S. statistics showed oil production dropping while fuel demand increased.
Brent futures for June delivery increased $1.17, or 1.5%, to $79.54 a barrel on their last day as the front-month, while the more heavily traded July contract surged 2.7% to $80.33.
West Texas Intermediate (WTI) crude in the United States increased $2.02, or 2.7%, to close at $76.78.
Despite the daily gains, Brent and WTI both fell for the second week in a row, with Brent falling for the fourth consecutive month as disappointing US economic data and interest rate uncertainty weighed on demand.
“The market was down much of the week on worries about a looming economic recession and an expansion of the banking crisis with First Republic,” said Phil Flynn, an analyst with Price Futures Group.
“However, there were headlines today indicating that there may be a solution to the First Republic problem, as well as data indicating an increase in oil demand and a decrease in output,” Flynn added.
According to three individuals familiar with the matter, US authorities are coordinating urgent discussions to save First Republic Bank (FRC.N), since private-sector efforts headed by the bank’s advisors have failed to yield a settlement.
According to the sources, the US Federal Deposit Insurance Corporation (FDIC), the Treasury Department, and the Federal Reserve are among the government entities that have begun to organise meetings with financial businesses to discuss a solution for First Republic.
In February, US oil output decreased to 12.5 million barrels per day (bpd), the lowest level since December. According to the Energy Information Administration (EIA), fuel consumption increased to about 20 million bpd, the highest level since November.
According to EIA statistics released this week, crude oil and petrol stockpiles in the United States declined more than predicted last week as demand for the motor fuel increased ahead of the peak summer driving season.
The number of oil rigs drilling in the United States remained steady last week at 591, but fell by one in April, marking the sixth monthly reduction, according to energy services company Baker Hughes Co (BKR.O).
According to loading programmes, supply of the five North Sea crude oil grades that support the dated Brent benchmark will average about 607,000 bpd in June, down from 696,000 bpd in May, meaning a 13% drop.
Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) have seen healthy demand while maintaining cost-cutting measures taken during COVID-19 lockdowns.
Crude prices have fallen in recent weeks and months as investors fear that interest rate rises would restrict demand.
Brent fell around 3% this week after dropping about 5% the previous week, while WTI fell about 1% this week after falling about 6% the previous week.
Brent fell by less than 1% in April, while WTI rose by nearly 1%. WTI prices increased for the first time in six months.
Consumer spending in the United States remained constant in March, but ongoing strength in underlying inflation pressures may drive the Fed to raise rates again next week to curb inflation, fueling worries of a recession.