Oil settled higher Thursday, with Brent crude topping $84 a barrel for the first time since April, supported by supply tightness following OPEC+ production cuts and renewed bullishness on the outlook for Chinese demand and global growth.
Crude has posted four consecutive weekly gains on an expected tightening of supply because of output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, as well as some involuntary outages.
Brent crude settled up $1.32, or 1.6%, to $84.35 a barrel while U.S. West Texas Intermediate (WTI) crude settled up by $1.31, or 1.7%, to $80.09.
"We see the oil market undersupplied," UBS analysts said in a report. "We retain a positive outlook and look for Brent to rise to $85–$90 over the coming months."
Still, oil dropped on Wednesday after data showed U.S. crude inventories fell less than expected and the U.S. Federal Reserve raised interest rates by a quarter of a percentage point, leaving the way open for another increase.
Risk appetite in wider financial markets is being boosted by growing expectations that central banks such as the Fed are nearing the end of policy tightening campaigns, which would boost the outlook for global growth and energy demand.
The U.S. economy grew by a bigger than expected 2.4% last quarter, government data showed Thursday, as labor market resilience supported consumer spending, while businesses boosted investment in equipment, potentially keeping a recession at bay.
"With interest rate hikes either at or near a peak amidst increasing views that a recession will be avoided, risk assets such as oil have become increasingly appealing," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
The European Central Bank raised interest rates for the ninth consecutive time on Thursday.
A pledge on Monday from China to boost policy support for the economy has spurred hopes of oil demand regeneration from the world's largest crude importer, Phillip Nova analyst Priyanka Sachdeva said in a note.
Coming into focus is an Aug. 4 meeting of OPEC+ ministers to review the market.