Crude oil benchmarks continued strong gains on Friday as sentiment improved following Thursday’s GDP data release that showed the U.S. economy grew higher than expected. Fears of a potentially painful recession in the world’s largest economy impacting oil demand had been lingering, particularly in the context of the recent higher-than-expected accumulation in inventories.
Data from the U.S. Bureau of Economic Analysis on Thursday showed the U.S. economy expanded 2.9 percent in the fourth quarter, as compared to a 3.2 percent growth in the third quarter. Markets were expecting a growth of 2.6 percent only in the fourth quarter.
Expectations that the OPEC+ that meets next week would make no changes to the output policy also helped maintain sentiment.
Markets now await the PCE-based inflation readings from the U.S. to assess whether the Fed would have further headroom to pursue its hawkish monetary policy stance.
The GDP data as well as the soon-to-be announced inflation readings would provide the context for the Federal Reserve when it meets next week to review the monetary policy and interest rates. Expectations that the Fed would slow down its rate hike to 25 basis points in the next review also supported sentiment.
Markets also priced in the likely uptick in global demand following the relaxations in Covid curbs and reopening of the economy in China.
Brent Oil Futures for March settlement, which had closed Thursday’s trading at $87.47 surged 1.3 percent overnight to trade at its current level of $88.59. The day’s high was $88.95.
West Texas Intermediate Crude Oil Futures for March settlement added 1.50 percent overnight to trade at $82.19. The benchmark which was at $81.01 at the previous close has touched a high of $82.42 in the day’s trade.