Oil up 1% after denial of reported UAE plan to exit OPEC

Oil prices rose by about 1% on Friday, recovering from an earlier slump after Reuters reported that the United Arab Emirates is not planning an exit from the Organization of Petroleum Exporting Countries (OPEC). Brent crude futures were up 72 cents, or 0.9%, to $85.47 a barrel. U.S. West Texas Intermediate (WTI) crude futures gained $1.04, or 1.3%, to $79.20. Prices had dropped by more than $2 per barrel after a media report that the United Arab Emirates had held internal debates on leaving OPEC and pumping more oil. A source with direct knowledge told Reuters that the report is “far from the truth”.

Both benchmarks are now on track for a weekly gain, after strong Chinese economic data earlier in the week underpinned hopes for oil demand growth. In China, activity in the services sector expanded at the fastest pace in six months in February and manufacturing activity in China also grew. China’s seaborne imports of Russian oil are set to hit a record high this month.

The world’s top oil importer is becoming increasingly ambitious with its 2023 growth target, aiming as high as 6%, sources told Reuters. The market broadly shrugged off a 10th consecutive week of crude stock builds  in the United States, and record exports of U.S. crude have lent more support to oil prices, UBS analyst Giovanni Staunovo said. Meanwhile, the dollar weakened on Friday. Analysts polled by Reuters expect the greenback to be under pressure over the next 12 months as well, which would make dollar-denominated oil cheaper for holders of other currencies. On the central bank front, hawkish signals continue to emanate from the European Central Bank, with ECB Governing Council member Pierre Wunsch saying its key interest rate could climb as high as 4% if underlying inflation remains high.