Oil ended its strongest week this year with a surge on Friday, built on receding fears of oversupply, as USA crude came within striking distance of $50 a barrel for the first time since the end of May.
Yesterday, the EIA once again helped to lift oil market spirits by reporting another hefty decline in USA commercial crude oil inventories for the week ending July 21.
The 7.2 million-barrel drop in inventories in the week ended July 21 was much more than the 2.6 million barrels forecast.
"This marks the fourth consecutive week that total hydrocarbon inventories have fallen during a time of year when they normally increase", said PIRA Energy oil analyst Jenna Delaney.
Adam Wise, senior managing director at John Hancock Financial Services Inc., summarized the reasons for trader optimism: he said the market is digesting "very strong draws in inventories across the board; we've also seen comments out of Saudi Arabia supporting prices in the form of export reduction". But the price gains immediately after the deal was announced encouraged USA shale producers to increase production. Kuwait and the UAE followed suit, and also pledged curbs in exports. The monitoring committee, known as JMMC said it would track Nigerian production patterns in the next weeks.
Investors were eyeing an update on the USA rig count expected later on Friday to assess any signs of a slowing down in drilling activity.
USA fuel exports are on track to hit another record in 2017, making foreign fuel markets increasingly important for the future growth prospects and profit margins of US refiners.
Crude oil futures posted their biggest weekly gain of the year amid signs the global supply glut could be over within a year.