(Reuters) – Oil prices rose on Friday and were on track for their second straight weekly gain, as resilient demand resulted in a larger-than-expected fall in U.S. oil stockpiles, offsetting fears of higher U.S. interest rates.
Brent crude futures were up 36 cents, or 0.5%, at $76.88 a barrel at 1114 GMT, while U.S. West Texas Intermediate crude gained 35 cents, or 0.5%, to $72.15 a barrel.
Both benchmarks were set to gain over 2% on the week.
Brent’s six-month backwardation , where nearby contracts trade above later ones indicating supply tightness, has risen sharply in recent sessions and touched a one-month high on Friday.
But Brent is still trading around $10 a barrel below April peaks, and has remained between around $71 and $79 a barrel since early May in the face of interest rate hikes and weak Chinese economic data.
U.S. crude stocks fell more than expected and gasoline inventories posted a large draw, the Energy Information Administration said on Thursday.
Top oil exporters Saudi Arabia and Russia this week have also announced fresh output cuts bringing total cuts by OPEC and its allies to around five million barrels per day (bpd), equating to 5% of global oil demand.
OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said.
However, oil price gains were capped by strengthening expectations that the U.S. Federal Reserve is likely to raise interest rates at its July 25-26 meeting, which could weigh on growth and thus oil demand.
The number of Americans filing new claims for unemployment benefits increased moderately last week, while private payrolls surged in June, data showed on Thursday.
More U.S. employment data is due at 1230 GMT.
“For as long as market participants fear that oil demand growth will slow considerably as interest rates are being raised and economic data remain disappointing in China…they are unlikely to share the concerns of any significant market tightening,” Commerzbank analysts wrote in a note.
Investors will look for cues on rate paths from U.S. and Chinese inflation data next week.
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