Oil Futures Follow Broader Markets to One-Week High

Oil futures rose to a one-week high Friday, as broader markets rallied on positive U.S. economic data.

Light, sweet crude for June delivery settled 86 cents, or 0.9%, higher at $96.02 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 86 cents, or 0.8%, higher at $104.66 a barrel.

Futures rose on the back of the stock market's rally, which was boosted by better-than-expected U.S. consumer data. The Standard & Poor's 500 Index was recently up 0.9% at 1,664.66.

"There's definitely a bit of macro optimism," said Julius Walker, global energy markets strategist at UBS in New York. "There's a lot of uncertainty on the economic outlook in the U.S. and in general...in the absence of that certainty oil prices get buffeted around every time one of these headlines come out."

A preliminary reading of the Thomson-Reuters/University of Michigan consumer-sentiment index for May rose more than expected Friday. Meanwhile, the Conference Board's Leading Economic Index for April increased, exceeding forecasts.

The data boosted stock markets, often seen as a barometer of broader economic sentiment, and injected optimism that the U.S. economy was improving and oil demand could improve with it.

"The expectation today [is] that the demand is going to be a little bit better after that strong consumer confidence number," said Phil Flynn, analyst at Price Futures Group in Chicago

Friday's gains come on the heels of a volatile week for crude. Futures sold off sharply at the beginning of the week, only to rally sharply the last two days. The Benchmark Nymex contract was down 2 cents on the week, and prices have been under pressure in recent months as supply remains strong in the U.S. and globally, while demand remains tepid.

Demand recently has been sluggish. On Wednesday, the Energy Information Administration reported steep increases in U.S. gasoline and distillate stockpiles, while implied gasoline demand dropped 1.2% to a two-month low in the week ended May 10.

Oil inventories fell slightly, but remain just shy of the highest levels ever recorded in EIA data since 1981.

A pick-up in demand could come later in the year as the market commences the peak summer driving season, which officially starts Memorial Day. Retail prices are at a six-week high of $3.62 a gallon, said Matt Smith, analyst at Schneider Electric.

Front-month June reformulated gasoline blendstock, or RBOB, settled 2.47 cents, or 0.9%, higher at $2.9069 a gallon. June heating oil settled 2.83 cents, or 1%, higher at $2.9370 a gallon.


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