Hope rises for oil exporting countries as crude oil prices rose on Friday after two days of declines, buoyed following data showing a rise in U.S. retail sales helped ease some concerns about a recession in the world’s biggest economy.
Brent crude was up 31 cents, or 0.5 per cent at $58.54 a barrel after falling 2.1 per cent on Thursday and 3 per cent the previous day, while the U.S. crude was up 43 cents, or 0.8 per cent at $54.90 a barrel, having fallen 1.4 per cent the previous session and 3.3 per cent on Wednesday.
The U.S. retail sales rose 0.7 per cent in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, according to data that came a day after a key part of the U.S. Treasury yield curve inverted for the first time since June 2007 prompting a sell-off in stocks and crude oil.
An inverted Treasury yield curve is historically a reliable predictor of looming recessions.
“The robust U.S. economic data released overnight is providing some degree of comfort as it suggests a less gloomy U.S. domestic outlook and will walk back some of the more immediate recessionary concerns,” Stephen Innes, managing partner at VM Markets, said in a note.
Also helping sentiment were comments from U.S. President Donald Trump that negotiations with China on trade were “productive,” suggesting a possible easing of trade frictions that have roiled markets.
The price of Brent is still up nearly 10 per cent this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries, OPEC and allies such as Russia, a group known as OPEC+. In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices.
A Saudi official on August 8 indicated more steps may be coming, saying “Saudi Arabia is committed to do whatever it takes to keep the market balanced next year”.
But the efforts of OPEC+ have been outweighed by worries about the global economy amid the U.S.-China trade dispute and uncertainty over Brexit, as well as rising U.S. stockpiles of crude and higher output of U.S. shale oil.