Oil prices gain on improving demand outlook

Crude oil futures prices extended gains on Friday due to improvement in oil demand outlook.

The West Texas Intermediate (WTI) for July delivery added 1.16 US dollars, or 1.64 per cent, to settle at 71.78 US dollars a barrel on the New York Mercantile Exchange. Brent crude for August delivery increased by 0.94 US dollars, or 1.24 per cent, to settle at 76.61 US dollars a barrel on the London ICE Futures Exchange.

Oil traders continued to add long positions in anticipation of higher oil demand arising from Chinese supportive policies.

Oil is rallying as the short-term fundamental outlook appears to have turned a corner, with Europe's diesel premium surging and as China delivers a massive crude import quota, said Edward Moya, senior market analyst at OANDA, a supplier of online multi-asset trading services.

China's imports of crude oil probably will become robust once stimulus flows through the economy, according to Moya.

Meanwhile, Vladimir Zernov, analyst with market information supplier FX Empire, attributed the rise of oil prices to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its partners as well as China's economic stimulus.

The United States had 552 active oil drilling rigs this week, four less from the previous week, while Canada added 18 active oil drilling rigs reaching 103 ones this week, according to data issued by oil service company Baker Hughes on Friday.

/KN/