Oil prices rose on Friday as improved German business sentiment countered nervousness about the euro zone debt crisis, while a weaker dollar and stronger equities also lent support.
Brent crude's gains could not prevent a second straight
weekly loss, while US crude managed a $0.22 weekly gain as the expiring May
contract went off the board higher, though well below its intraday peak as Wall
Street pared gains.
German business sentiment rose for the sixth month in a row
in April. The Munich-based Ifo think tank said its business climate index
inched up from March to its highest since July 2011, Reuters reported.
The German data helped fuel the euro's climb to a two-week
high against the dollar, and the greenback's weakness coupled with stronger
equities added lift for oil prices.
"People are talking about the Ifo being better than
expected and may be reducing the fear about the debt crisis, and the weak
dollar and higher equities help crude, along with short-covering ahead of the
weekend," said Gene McGillian, analyst at Tradition Energy in Stamford,
Brent June crude rose $0.76 to settle at $118.76 per barrel,
having reached $119.69. For the week, Brent fell $3.07, or 2.52% and it slumped
to $116.70 intraday on Wednesday, the lowest since 10 February.
Expiring US May crude gained $0.78 to settle at $103.05 per
barrel, after rising $2 to $104.27.
US June crude added $1.16 to settle at $103.88 per barrel.
Friday's price gains came with total trading volumes still
25% below 30-day averages for Brent and US crude, and turnover for both was
under half a million lots.
Money managers raised their net long US crude futures and
options positions in the week to 17 April, data from the US Commodity Futures
Trading Commission showed.
Brent's premium to its US counterpart narrowed to end at
$14.88 per barrel based on June settlements, but having recovered after testing
support near $13 per barrel earlier in the week.
The Brent-US crude spread retreated from last week's close
at $19 after Monday's news that Enterprise Product Partners and Enbridge plan
to reverse the flow of the Seaway oil pipeline by mid-May, two weeks ahead of
The reversal is intended to ease the glut in US crude
stockpiles in the Midwest as the pipeline brings Canadian oil and North Dakota
crude to the US Gulf Coast.
While crude oil demand in the US continued to fall in March,
gasoline consumption rose for a second consecutive month, the industry group
American Petroleum Institute said on Friday.
The API's fuel demand figure for March is higher than the US
Energy Information Administration's preliminary estimate. The EIA issues its
revised March number at the end of May.
Despite large drops recently in US gasoline inventories,
they were nearly 6 million barrels above the year-earlier level as of 13 April,
according to Wednesday's weekly EIA report.
Iran's crude exports have slipped to 2.1 million barrels per
day, compared with an average of 2.3 million bpd in the last Iranian year that
ended on 19 March, Iranian oil officials said in a report on Friday.
Tightening sanctions on Iran and the EU’s embargo on Iranian
crude purchases set for July, along with lower North Sea production, helped
send Brent prices above $128 per barrel in March, the highest since 2008.
But revived talks between Iran and major powers over Tehran's
nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs
of slower US economic and employment growth, helped pull oil prices back from
The EU could review in the next two months an embargo on
Iranian oil imports due to take effect in July, a senior EU official said.