Oil Logs Daily, Weekly Gains As Traders Embrace Earlier Bullish News

Meanwhile, Russian crude is stranded off the South Korean coast: File Image/Pixabay

Oil prices on Friday were heading toward a weekly gain despite dramatic about-faces of trading sentiment in previous sessions; it also climbed for the day due to positive economic news from the U.S. and China.

Brent settled up $1.12 at $83.55 per barrel, while West Texas Intermediate settled up 65 cents at $78.01; for the week, both benchmarks hurtled toward their biggest weekly increase since mid-October and the beginning of the Israel/Hamas war, at over 6 percent.

Traders continued to respond to the larger than expected drawdown in U.S. stockpiles, a massive 9.2 million barrels last week that far eclipsed analytical expectations for a 2.2 million draw; other data revealed faster than expected economic growth in the first quarter for that country, plus GDP increases for the fourth quarter of 2023 at 3.3 percent and total growth for the year coming in at 2.5 percent.

Further supporting upbeat sentiment was earlier news of China's latest initiatives to boost economic growth, including the central bank vowing to cut the amount of cash banks must hold as reserves from February 5 as well as considering a $278 billion rescue package for its stock market.

Robert Thummel, portfolio manager at Tortoise Capital, told CNBC, "The two largest oil consumers in the world could likely have some pretty strong demand this year."

Meanwhile, media speculated that Middle East geopolitical tensions could ease and further bolster crude prices if indications of a truce in Gaza proves accurate; but Tamas Varga, analyst at PVM, doubted this outcome.

Varga stated in a note on Friday that, "An obstinate Israel, which refuses to effectively discuss truce, let alone a sustainable peace plan unless Hamas is obliterated, will ensure continuous shipping disruptions in the Red Sea."

In other oil news on Friday, shipping data revealed that about 10 million barrels carried by 14 tankers of crude from Russia have been stranded off the coast of South Korea near the port of Yosu.

While the situation was attributed to U.S. sanctions against the former Soviet Union, Oilprice.com pointed out that "the intent was not to disrupt the flow of oil, but to restrict revenues to Russia, who would otherwise use crude oil money to fund its military operations in Ukraine."