Investing.com -- Oil prices rose in Asian trade on Friday, hovering near 10-week highs on the prospect of tighter supplies, amid disruptions in Libya and Nigeria, while data showing a drop in U.S. inflation also supported sentiment.
Crude markets rallied sharply this week, tracking declines in the dollar as softer-than-expected U.S. inflation data spurred bets that the Federal Reserve was close to reaching peak interest rates.
Brent oil futures rose 0.3% to $81.54 a barrel, while West Texas Intermediate crude futures rose 0.3% to $77.12 a barrel by 21:56 ET (01:56 GMT). Both contracts were at their highest levels since late-April, and were set to rise between 3.8% and 4.5% this week, their third straight positive week.
Libya, Nigeria disruptions add to tighter supplies, demand seen improving
Several Libyan oil fields, including the country’s second-largest, Sharara, were shut down on Thursday, amid protests by local tribes over the kidnapping of a former minister.
Separately, British oil and gas giant Shell PLC (LON:SHEL) suspended crude loading at Nigeria’s Forcados terminal due to a suspected pipeline leak.
The disruptions in supply come on the heels of deep production cuts by Saudi Arabia and Russia, and point to tighter oil markets in the coming months.
They also come as the Organization of Petroleum Exporting Countries (OPEC) flagged higher global oil demand in 2023, in its monthly report released on Thursday.
This was accompanied by data showing that China, the world’s largest crude importer, saw close to record-high oil imports in June, as refinery demand picked up in the country.
But fuel demand in China has remained languid, casting doubts over whether the country will drive up global oil consumption this year.
U.S. inventory data also showed that gasoline demand slowed substantially in the past week, hit by adverse weather in some parts of the country. The drop in fuel demand was unconventional for the travel-heavy summer season.
Weak U.S. inflation triggers crude rally
But oil prices were set for stellar gains this week, as the dollar plumbed 15-month lows after weaker-than-expected U.S. inflation data.
After soft consumer price index data on Wednesday sparked a rally in oil markets, weaker-than-expected producer price index data saw this rally extend into Thursday.
The readings pushed up hopes that the Federal Reserve will have limited reason to keep raising interest rates this year, although some Fed officials still posited at least two more hikes.
But while the Fed is still expected to hike rates later in July, markets now began questioning the need for a September hike.