Crude oil prices extended their gains on Friday, reaching the $66-a-barrel level after Opec delivered an upbeat assessment of demand conditions at the oil producer group’s meeting in Vienna on Thursday.
Nymex July West Texas Intermediate rose 92 cents to $66.00 a barrel after reaching $66.03, a fresh seven-month high.
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ICE July Brent gained 90 cents at $65.29 a barrel.
Opec’s announcement that it would maintain production targets was expected but US inventories data released on Thursday did provide a positive surprise with a larger-than-expected fall in crude stocks as refineries stepped up activity for the summer driving season.
US crude stocks fell 5.4m barrels last week, well above the consensus market forecast for a modest decline of 700,000 barrels, while refinery utilisation increased 3.3 percentage points to 85.1 per cent.
Ed Meir of MF Global said that Opec would welcome the US data as the first signs of a meaningful inventory drawdown but he cautioned that the destocking trend might not continue.
“Overall demand still remains rather weak, while there is still a massive amounts of oil stored in tankers,” said Mr Meir who cautioned that some of this stored oil could start to move onto the physical market.
Noting that risk appetite was improving, analysts at Barclays Capital said commodities were regaining favour with hedge funds increasing their exposure in recent weeks.
Barclays pointed out that net long positions (bets on prices rising) in US commodity futures markets had increased above 800,000 lots for the first time since July 2008 while the net long positions as a percentage of all active contracts had risen sharply to 12 per cent, the highest in ten months.
Gold charged above the $970-a-troy ounce level, reaching a high of $975.15, up 1.7 per cent from New York’s close of $958.80 amid concerns about increasing levels of government debt, the threat of currency debasement and rising inflationary pressures.
