Oil prices increased more than 4% during the week ending Jan. 26, reaching two-month highs over potential disruptions in the Red Sea and greater demand hopes in the world's largest oil-consuming countries, the US and China.
International benchmark Brent crude traded at $82.02 per barrel at 15.11 p.m. local time (1211 GMT) on Friday, increasing by over 4.4% relative to the closing price of $78.56 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, traded at $76.67 a barrel at the same time on Friday, for a rise of around 4.6% from last Friday's session that closed at $73.25 per barrel.
Both benchmarks started the week on a negative note over weak demand woes in the world’s largest fuel consumer, the US, as strong winter storms killed several people in many US states, destroyed buildings and cut power. Authorities have warned of the possibility of another bout of snow and ice sweeping in for the weekend.
However, these concerns were eased, and prices rebounded later on Thursday to two-month highs, with data revealing strong demand in the US and due to escalating tension in the Middle East.
According to data released by the Energy Information Administration (EIA) on Wednesday, US commercial crude oil inventories decreased by around 9.2 million barrels to 420.7 million barrels, compared to the market expectation of a fall of around 3 million barrels.
Meanwhile, an official from the UN Conference on Trade and Development (UNCTAD) on Thursday warned against the negative impacts of the ongoing crisis in the Red Sea on global trade.
'We are very concerned that the attacks on Red Sea shipping are adding tensions and costs to global trade,' Jan Hoffmann, chief of the UNCTAD Trade Facilitation Section, told reporters virtually.
The Red Sea route and the Suez Canal are 'critical' for global trade flows, Hoffmann said, adding: 'The Suez Canal handles approximately 12% to 15% of global trade. For container shipping, it's even more important as 20% of the world's container trade goes through the Suez Canal.'
On Monday, US and British forces said they carried out strikes against eight Houthi targets in Yemen in response to the group’s attacks in the Red Sea.
Following the strikes, Yemen's Houthis vowed to retaliate, as Houthi military spokesman Yahya Saree said: 'These assaults won't go unpunished.'
Demand hopes in China, the world's largest importer and second-largest oil consumer, also helped price upticks as the country ramped up efforts to revive its economy, which in turn drove up oil prices.
The depreciation in the US dollar against other currencies also aided oil price rises, as the market expects that the Federal Reserve will lower interest rates this year, with a cut in March looking increasingly likely. When the Federal Reserve cuts interest rates, the value of the dollar falls.
Investors are now awaiting the Fed's interest rate decision next week, which will influence the direction of the US dollar and thus demand for oil.
Oil prices declined on Friday over investor profit-taking; however, both benchmarks are set to end the week with gains.
By Handan Kazanci and Sibel Morrow
Anadolu Agency
energy@aa.com.tr