Oil futures on Friday headed higher for the day and week as the industry drew optimism from the outcome of a Thursday meeting of OPEC members and allies about adherence to a global production cut pact.
Commodity analysts also said that renewed talks about a recovery fund to help Europe’s troubled economies and easing Sino-American relations were helping to lift the outlook for crude demand.
European Union leaders relaunched negotiations on Friday over a €750 billion ($840 billion) recovery fund to revive the eurozone but divisions remain.
“The EU 750-billion-euro recovery fund will support the economic recovery in Europe and help the prospects for stronger crude demand later this summer,” wrote Edward Moya, senior market analyst at Oanda, in a daily research note.
A report that China-U.S. trade tensions might be easing also helped to boost crude prices. Bloomberg News reported that China will increase buying of U.S. soybeans, corn and ethanol in line with a phase one trade deal struck at the start of this year.
“Globalization is also important for crude demand and if the US and China can continue a healthy trade relationship that should also be positive for oil prices,” he wrote.
On Thursday, the Joint Ministerial Monitoring Committee, or JMMC, which monitors compliance with OPEC output quotas, held its gathering via videoconference, saying Iraq and Kazakhstan have already submitted “compensations schedules,” and other “underperforming participants” will have until June 22 to submit their schedules for meeting their quotas for production cuts.
West Texas Intermediate crude for July delivery, the U.S. benchmark, was trading $1.11, or 2.9%, higher at $39.95 a barrel on the New York Mercantile Exchange, after rising 2.3% on Thursday.
Global benchmark Brent oil for August delivery added 95 cents, or 2.3%, at $42.46 a barrel on ICE Futures Europe, after gaining 2% in the previous session.
For the week, WTI is on pace for a more than 10%, while Brent was looking at a 9.6% weekly advance.