(Bloomberg) -- Oil climbed for a third day as key market gauges flashed signs of stronger demand and traders gauged the outlook for interest rates.
Brent crude rose near US$86 a barrel and West Texas Intermediate topped $83. Timespreads that measure market health have surged in recent sessions indicating tighter supplies, with WTI’s prompt spread reaching its firmest level since October.
While data earlier in the week indicated U.S. inflation has eased, producer prices rose slightly more than expected on Friday, clouding the outlook on U.S. Federal Reserve interest rate cuts. That followed data this week showing falling inventories at the storage hub of Cushing, Oklahoma, as well as a drop in U.S. crude stockpiles.
Oil is pushing higher against a backdrop of OPEC+ supply curbs, with vessel-tracking showing a sharp slump in Russian exports lately. Still, there has been some caution after the International Energy Agency this week sounded the alarm on the outlook for demand as China’s economy cools.
“Spreads suggests that refinery appetite, the possible bellwether of seasonal growth in consumption in the Northern Hemisphere, is on the rise,” said Tamas Varga, an analyst at brokerage PVM. “The recent downside correction is evidently over, although the speed of further ascent might be hindered by falling Chinese crude oil imports.”
Summer is presenting further risks to supply, too. In Canada, a ring of wildfires has erupted around the country’s unofficial oil-sands capital of Fort McMurray, with some production having already been curtailed by a separate blaze to the northeast.
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