On Friday (January 26), WTI crude oil wrapped up its best week in over four months as positive economic data from the world's two largest economies raised hopes for stronger crude oil demand this year.

At the end of trading on January 26, WTI crude oil futures rose 65 cents (or 0.84%) to $78.01 per barrel. Brent crude futures increased by $1.12 (or 1.36%) to $83.55 per barrel.

WTI had its best weekly gain, surging 6.27%, since September 1, 2023, while Brent oil rose 6.35% this week. Both contracts have jumped more than 8% year-to-date.

For consumers, the increase in oil prices means slightly higher gasoline prices at the pump. According to AAA, the national average price for a gallon of gasoline was $3.10 on Friday, up 1 cent from a week ago.

The U.S. reported higher-than-expected economic growth of 3.3% in Q4 2023, surpassing the 2% forecast from Wall Street. Meanwhile, China is easing reserve requirements for banks in an effort to boost growth amid concerns that its economy is slowing down.

Robert Thummel, Portfolio Manager at Tortoise Capital, stated, “The two largest oil-consuming countries in the world could see quite strong demand this year.”

The prospect of higher demand comes as U.S. crude oil supply decreases due to winter storms. The U.S. Energy Information Administration (EIA) reported a 9.2 million barrel drop in crude oil inventories last week, with U.S. production falling by 1 million barrels per day.

Additionally, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, have no plans to change their oil production cuts at their meeting on Thursday (January 25), Bloomberg News reported. OPEC+ is cutting 2.2 million barrels per day at least through the first quarter to support oil prices.

There are also signs that a ceasefire in Gaza is being implemented. If this occurs, it could ease geopolitical risks in the Middle East, which often drive oil prices higher.

Source: Vietstock