LONDON: Oil prices rose for a second session on Friday, buoyed by better than expected US economic growth, strong middle distillate refining margins and hopes of a rapid recovery in Chinese demand.
Brent futures gained $1.17, or 1.34 percent, to trade at $88.64 a barrel by 1332 GMT. US crude was up $1.17, or 1.44 percent, at $82.18 and on track for its highest daily jump in percentage terms for two weeks.
Both benchmarks advanced by more than 1 percent on Thursday and are heading for a third straight week of gains.
Brent’s backwardation has strengthened to about $2.73 from less than a dollar at the start of the month.
Backwardation is a market structure in which front-month contracts are more expensive than those for later loading, indicating tight current supply.
Delegates from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, meet next week to review crude production levels, with sources from the oil producer group expecting no change to current output policy.
The US Federal Reserve’s next decision on interest rates will be made at meeting over Jan. 31 and Feb. 1 against a backdrop of a dip to inflation and gross domestic product that grew by a faster than expected 2.9 percent in the fourth quarter.
“The positive batch of data gave oil prices a lift,” said PVM analyst Stephen Brennock.
Gains on US crude were capped by a 4.2 million barrel build in stocks at Cushing, the pricing hub for NYMEX oil futures, this week.
“We believe soaring middle-distillate prices and cracks are mostly behind crude’s bullish price action,” JPMorgan said in a note, pointing to heavy refinery maintenance and outages, plus the European ban on Russian refined products from Feb. 5.
In China, critically ill COVID-19 cases are down 72 percent from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped by 79 percent from their peak, pointing to a normalization of the Chinese economy and boosting expectations of a recovery in oil demand.