(Reuters) – Oil prices rose on Friday, buoyed by evidence of tightening supplies and economic stimulus in slow-recovering China.
Brent futures were up 94 cents at $80.58 a barrel by 0955 GMT – rising as high as $1 earlier – while U.S. West Texas Intermediate (WTI) crude also climbed 94 cents to $76.59 a barrel.
The supply deficit that had been looming in the second half of the year is now backed up by hard figures, Commerzbank analysts said, citing recent data indicating China and India’s imports of crude oil from Russia hit an all-time high in June.
However, buying interest from India is likely to weaken, given narrowing discounts and payment problems. Meanwhile, in early July Russia joined Saudi Arabia in cutting output for August.
“Demand from China and India could therefore shift more towards other suppliers, which would push up oil prices,” the analysts said.
In the U.S., crude inventories have also fallen, supported by a jump in crude exports as well as higher refinery utilisation, the Energy Information Administration (EIA) said on Wednesday.
“That tightness in supply is already showing up in inventories,” analysts from ANZ Bank said.
Meanwhile, investors welcomed stimulus measures designed to reivigorate China’s sluggish economy.
Latest figures from the world’s second-biggest oil consumer suggest the rate of gross domestic product growth in the second-quarter augurs a miss of the government’s 5% annual growth target.
On Friday, Chinese authorities unveiled plans to help boost sales of automobiles and electronics to shore up its sluggish economy.
“The announcement remains short on detail but notions of China buying more cars gives rise in hope for oil investor bulls,” PVM analyst John Evans said.
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