Oil prices park at week high as US inventories drop

Oil prices rose in European trade on Friday, extending gains for the second straight session, with US crude scaling a one-week high, on track for weekly gains following a surprise US inventory drawdown. 

Markets are now focusing on oil market fundamentals once more as the tension between Iran and Israel fades, while hopes climb for improving US demand .

Prices 

US crude rose 0.8% to $84.42 a barrel, the highest in a week, with a session-low at $83.61. 

Brent rose 0.7% to $87.96 a barrel, with a session-low at $87.79. 

On Thursday, US crude rallied 1.2%, while Brent added 0.1% as the US dollar declined against major rivals. 

Weekly Trades

Oil prices are up 2.25% on average this week, on track for the first weekly profit in three weeks.

US Stocks 

The Energy Information Administration reported a drop of 6.4 million barrels in US crude stocks last week to 453.6 million barrels, while analysts expected a drop of 2.1 million barrels.

Gasoline stocks fell 0.6 million barrels to 226.7 million barrels, as distillate stocks rose by 1.6 million barrels to 116.6 million barrels. 

US Production

The EIA also reported no change in US production last week at 13.1 million bpd. 

Iran-Israel Tensions Fade  

The Iranian government has strongly signaled that it doesn’t plan to react to Israel’s recent attack on Iranian soil on Friday.

Iran’s foreign minister said in earlier remarks that as long as Israel doesn’t attack Iranian interests once more, Iran won’t react. 

Global Demand 

Many analysts now expect interest rates to fall in the UK and EU in June, which would underpin growth and fuel demand. 

Capital Economics’ analysts said in a memo that the services sectors in the eurozone and the UK have expanded this month by the fastest pace in a year, indicating brisk momentum.