With global demand for crude oil expected to be higher than expected for the remainder of 2010, oil prices rose on Friday. Although concerns regarding the health of European banks and the European economy put a damper on oil prices at the start of the week, news that US jobless claims were down helped to reduce fears of a double dip recession. See the following article from OilPrice.com for more on this.
An uneasy market seized on an upward revision in crude oil demand this year and other bullish news to push oil prices up nearly 3% on Friday, thus salvaging a gain for the week.
The oil fever also enabled the stock market to eke out a small gain as investors marked up prices for the oil majors.
The Dow Jones Industrial Average closed at 10,463 on Friday, up 47.60.
The benchmark West Texas Intermediate oil futures contract settled at $76.45 on Friday, compared with $74.25 on Thursday and $74.60 a week ago.
The International Energy Agency said on Friday that it had revised its estimate for global oil demand in 2010 upwards by 50,000 barrels a day — forecasting demand of 86.6 million barrels a day. It left its forecast for 2011 unchanged at 87.9 million barrels a day.
Other bullish news came on Friday with China reporting that crude oil imports in August were up 10% from the previous month to 5 million barrels a day. Reports of a leak in a Canadian oil pipeline bringing crude to refineries in the U.S. also boosted prices.
Japan, the third biggest oil consumer after the U.S. and China, added to bullish sentiment on Friday by raising its estimate of GDP growth in the second quarter to a 1.5% annual rate from 0.4% reported earlier.
The U.S. Energy Information Administration published its inventories report a day later than usual in the holiday-shortened week, reporting a drop of 1.9 million barrels of crude in the week ended Sept. 3, far less than estimated earlier by a trade group, and this pushed down oil prices Thursday.
Oil prices started the week on a weaker note amid a new bout of concern over the situation in Europe, and particularly the health of European banks. Europe continued to roil markets throughout the week as several countries face the need to roll over debt.
On the other hand, a big drop in new jobless claims in the U.S. indicated that a double-dip recession may not be in the offing after all.
This article by Darrell Delamaide has been republished from OilPrice.com. You can also view this article at OilPrice.com, a site focusing on energy, finance and geopolitical news.