By Darrel Delamaide, Oilprice.com
The benchmark West Texas intermediate contract settled Friday at $76.09 a barrel, up 65 cents on the day. On Tuesday, the contract declined for the sixth session in a row, closing at $71.98, its first dip below $72 in a month.
Crude oil finished last week at $72.14 a barrel after falling 8.5% in the course of the week.
The Dow Jones Industrial Average surged above the 10,000-point level again this week, indicating a brighter economic outlook and buoying oil prices. The Dow climbed 511.55 points on the week, or 5.3%, to close Friday at 10,198.03, its strongest weekly increase in a year.
A substantial decline in oil inventories, reported on Thursday in a holiday-shortened week, pushed oil prices up nearly 2% on the day. The US Energy Information Administration reported crude inventories down by 5 million barrels, compared with consensus forecasts of a 1.8 million-barrel decline. A string of weekly increases in oil stocks had been weighing on prices.
Revised global growth forecast
The International Monetary Fund on Thursday revised its forecast for global growth this year upwards, to 4.6% from 4.2%, lending further support to oil prices. The rosier forecast came in spite of the fiscal crisis in Greece that has rocked the euro area and unsettled markets.
The IMF said the revision came after “stronger activity” in the first half. The multilateral lending agency left is growth forecast for 2011 unchanged at 4.3%.
Still, analysts were waiting for clearer signals about the future direction of the economy, and are looking now to the beginning of corporate earnings season next week.
The oil inventory decline was attributed in part to delays in imports because of Hurricane Alex, so some analysts predicted an increase in oil stocks next week as the delayed oil is delivered.
Also, a new tropical depression in the Gulf of Mexico that might have nudged oil prices higher with the threat of further disruption to production and shipping failed to develop into tropical storm Bonnie and hit the coast at the Mexican-Texas border, bypassing offshore platforms.