Ephemeral bullish news on Friday trumped deeper economic concerns: File Image/Pixabay
A U.S. refinery fire, a reduction in rig counts in that country, and soaring diesel prices all contributed to a bullish end of week in the oil trading community even if these events were ephemeral, with crude futures climbing about 1 percent.
With prices reaching a near seven-month high, diesel futures boosted its crack spread to the highest since January of this year; meanwhile, a fire that broke out in a giant naphtha storage tank at Marathon Petroleum's 596,000 barrel per day (bpd) refinery in Garyville, Louisiana was contained on Friday afternoon; and Baker Hughes data showed that U.S. energy firms in August cut the number of active oil rigs for a ninth straight month.
All of this was said to have boosted trading confidence even though the Ifo institute on Friday reported that Germany's business climate index stood at 85.7, down from 87.4 in July, and less than expectations of an 86.7 reading.
Phil Flynn, senior market analyst, Price Futures Group Inc.
The main thing was concern about diesel prices, the diesel crack spread and worries about diesel shortages
Ifo also noted that companies' expectations for the next six months were increasingly pessimistic, which in turn played into fears that the country's economy may be heading for its second recession inside a year.
The grim news followed a University of Michigan survey on Friday showing that U.S. consumer sentiment fell in August due to inflationary concerns, at a reading of 69.5 compared with 71.6 in July.
Friday's oil gains were also achieved despite the U.S. dollar rising to an 11-week high and the . Federal Reserve warning that further interest rate hikes may be in the offing.
Brent rose $1.12, or 1.3 percent, to settle at $84.48 per barrel, while West Texas Intermediate rose 78 cents, or 1 percent, to settle at $79.83.
Phil Flynn, senior market analyst at Price Futures Group Inc., reiterated, "The main thing was concern about diesel prices, the diesel crack spread and worries about diesel shortages when refineries go into maintenance."