US crude oil prices closed higher Friday, lifted by market hopes for stronger demand in the United States ahead of the nation’s summer holiday driving season.
But traders kept a cautious eye on the situation in Libya, where the government’s deal with rebels lifting their blockades of oil terminals would allow Libyan oil to return to the market.
New York’s main contract West Texas Intermediate for delivery in May closed at $103.74 a barrel, a gain of 34 cents from Thursday.
Brent North Sea crude for May fell 13 cents to settle at $107.33 a barrel in London.
Several factors were making the market bullish about the prospects of higher US crude oil demand in the coming weeks and months, said independent analyst Andy Lipow.
Demand appeared set to increase because gasoline stockpiles have dropped sharply in recent weeks, making for tighter inventory shortly before Americans take to the roads in droves in the warmer weather.
As refiners exit maintenance season, the utilisation rate is bound to pick up “as the demand for gasoline grows in the summer, supporting prices,” Lipow said.
Adding a bump-up to positive US market sentiment was a better-than-expected increase in US consumer confidence in April reported by the University of Michigan. Confidence hit a nine-month high in the world’s largest crude-oil consumer.
“Relatively good employment reports and improved income gains are assisting in pushing consumer mood higher. However, (gasoline) pump prices have been creeping up and food inflation is a big downer from many households that live paycheck to paycheck,” said Chris Christopher at IHS Global Insight.
Analysts were waiting to see whether Libyan oil terminals would reopen as agreed by the government and rebels.
“Traders are skeptical because we have seen a series of announcements. Traders will wait until we see these ports reopen and exports resumed,” Lipow said.
The seizure by rebels of four eastern oil terminals in July in pursuit of their campaign for restored autonomy for the eastern Cyrenaica region slashed output from 1.5 million barrels per day to just 250,000 bpd.
OPEC Secretary General Abdullah el-Badri projected that Libya’s oil exports would quadruple from current levels and hit 1.0 million barrels per day by mid-June after rebels ended a blockade of two terminals.
Blockades on two other terminals remain in place pending a new agreement.