NEW YORK, Nov 17 (Reuters) – Oil prices rose about 4% on Friday, as investors who had taken short positions took profits, prompting a rebound in prices that slumped to four-month lows during the previous session, while U.S. sanctions on some Russian oil shippers lent support.
Brent futures rose $3.30, or about 4.3%, to $80.72 a barrel by 13:51 p.m. (1851 GMT) . U.S. West Texas Intermediate crude (WTI) was at $75.85, up $2.95, or 4.05%.
“You’re getting a natural profit-taking rebound and short covering, to a degree,” said John Kilduff, partner at Again Capital LLC in New York.
Both benchmarks remained on track for their fourth straight weekly decline, with WTI down about 1.7% on the week and Brent 0.9%.
“When you have a sharp drop in price, the producers think twice about moving ahead with capital spending and projects,” said Phil Flynn, an analyst at Price Futures Group.
The U.S. imposed sanctions this week on maritime companies and vessels for shipping Russian oil sold above the Group of Seven’s price cap.
A rise in U.S. crude inventories and a sustained record level of production pressured oil prices this week.
Indicating growing supply, U.S. energy firms this week added oil and natural gas rigs for the first time in three weeks, as the oil rig count rose by the most since February, energy services firm Baker Hughes said Friday.
China’s deepening property crisis and slowing industrial growth also weighed.
“Demand growth from China has been falling short of expectations,” said Andrew Lipow, president of Lipow Oil Associates.
Some analysts said Thursday’s sharp sell off may have been overdone, particularly in light of escalating tensions in the Middle East that could disrupt oil supplies and the U.S. vowing to enforce sanctions against Hamas-backer Iran.
With Brent below $80 a barrel, many analysts expect OPEC+, principally Saudi Arabia and Russia, to extend output cuts into 2024.
OPEC+ is set to consider whether to make additional oil supply cuts when the group meets later this month, three sources told Reuters.
“Oil prices are down slightly this year despite demand exceeding our optimistic expectations,” Goldman Sachs analysts said in a note.
“Non-core OPEC supply has been much stronger than expected, partly offset by OPEC cuts.”
For 2023, the United States, which makes up two-thirds of non-OPEC+ growth, is forecast to deliver annual gains of 1.4 million barrels per day (bpd), according to the International Energy Agency (IEA).
Meanwhile, inflation in the euro zone appears to be thawing. On Friday, the EU’s statistics office confirmed annual inflation slowed sharply.
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