Oil futures climbed about 1 percent to a one-week high on Friday as US diesel prices soared, the number of oil rigs dropped, and a fire broke out at a refinery in Louisiana.
Brent futures rose $1.12, or 1.3 percent, to settle at $84.48 a barrel, while US West Texas Intermediate (WTI) crude rose 78 cents, or 1.0 percent, to settle at $79.83.
Diesel futures soared about 5 percent to a near seven-month high, boosting the diesel crack spread, a measure of refining profit margins, to its highest since January 2023.
“The main thing was concern about diesel prices, the diesel crack spread and worries about diesel shortages when refineries go into maintenance,” said Phil Flynn, an analyst at Price Futures Group. He added prices also drew support from a fire at a Louisiana refinery and a drop in US oil rigs.
Weak economic data and a stronger dollar limited gain. For the week, Brent declined less than 1% and WTI lost about 2 percent. Last week, both benchmarks fell about 2 percent.
A fire in a giant naphtha storage tank was contained on Friday afternoon at Marathon Petroleum’s 596,000 barrel-per-day (bpd) Garyville, Louisiana refinery.
In August, US energy firms cut the number of active oil rigs for a ninth straight month, energy services firm Baker Hughes said in its closely followed report.
Crude prices rose despite weak economic news from Germany, Europe’s biggest economy, and the US dollar, rose to an 11-week high against a basket of other currencies after US Federal Reserve Chair Jerome Powell said further interest rate hikes may be needed to fight inflation.
Higher interest rates can slow economic growth and reduce oil demand. A stronger dollar can also slow demand by making oil more expensive for holders of other currencies.
US consumer sentiment, meanwhile, fell modestly in August, as short- and long-term inflation expectations worsened, a survey showed on Friday.
Analysts at Morgan Stanley said they expect Brent prices to be well supported around $80 per barrel, with crude likely to remain in a deficit over the rest of this year before returning to a small surplus in early 2024.
But the likelihood of crude deficits is no foregone conclusion, said John Evans of oil broker PVM.
Norwegian energy firm Equinor, for example, said it started production at its extended Statfjord Ost field six months ahead of schedule.
