Oil prices rise as world's top consumers boost demand

(Reuters) -Oil prices rose on Friday, driven by growing demand in the world's biggest consumers, the United States and China, while the U.S. Federal Reserve gave a positive signal on the possibility of rate cuts.

Brent crude futures were up 0.7%, or 58 cents, at $83.54 a barrel by 0700 GMT. U.S. West Texas Intermediate crude futures rose 0.9%, or 69 cents, to $79.62.

Both contracts were down slightly on the week so far, however, with Brent and WTI down 0.1% and 0.5%, respectively.

Data from the Energy Information Administration showed that U.S. gasoline inventories fell 4.5 million barrels last week, and distillate stockpiles were down 4.1 million barrels. Both fell more than expected, in a sign of strong demand.

"With the U.S. driving season just on the horizon, the market could get even tighter in coming weeks," ANZ Research said in a note.

In China, imports of crude oil rose 5.1% in the first two months of 2024 from a year earlier, and India's fuel consumption increased 5.7% in February on the year, amid strong factory activity in the world's third-biggest oil importer and consumer.

After accounting for this year's extra day in February, crude oil imports in China were up 3.3% in annual terms, Capital Economics said in a note, in line with expectations of a demand increase for the year.

"But that growth will be substantially lower than in 2023, when the end of zero-COVID restrictions led to a surge in activity in transport and travel," it added.

Providing further support to oil prices, Federal Reserve Chair Jerome Powell said on Thursday that the U.S. central bank was "not far" from gaining enough confidence that inflation is falling sufficiently to begin cutting interest rates.

"Weakness in the U.S. dollar may have offered some support thus far, as Powell's comments seem to fall short of the hawkishness that was initially expected," said Yeap Jun Rong, a market strategist at IG.

In Canada, TC Energy (NYSE:TRP)'s Keystone oil pipeline resumed service on Thursday after going offline and temporarily curbing a major conduit of Canadian oil to the United States - one of the factors supporting prices in the previous session.