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Prices of oil rise due to strong demand and a weaker US Dollar

Prices of oil rise due to strong demand and a weaker US Dollar

The oil prices rose on Friday, thanks to a stronger dollar and an optimistic outlook for the demand in the United States, after fuel inventories dropped more than expected.

Brent crude futures gained 43 cents or 0.6% to $71.21 per barrel at 0423 GMT. This is their highest level since the 3rd of March. The U.S. West Texas Intermediate (WTI), which is a crude oil produced in the United States, gained 38 cents or 0.6% to $67.54.

U.S. data revealed a greater than expected drawdown in distillate stocks, including heating oil and diesel, last week. The drop was 2.8 million barrels compared to the 300,000 barrels predicted in a survey.

JP Morgan analysts wrote in a report that the U.S. oil outlook is healthy, despite lower passenger numbers. They added that this did not indicate broader weakness of demand.

Analysts said that the global oil demand was 101.8 million barrels a day, an increase of about 1.5 million barrels a year.

The U.S. crude oil inventories rose by 1.7 million barrels - exceeding the expectations of a 512,000 barrel increase in a previous poll.

The dollar has been on a downward trend since the end February, which also helped oil prices rise.

"The weakness of the Dollar appeared to support dollar-denominated crude oil prices throughout the week," said Phillip Nova Senior Market Analyst Priyanka Sahdeva.

She added that oil investors remain hopeful about the possibility of the Federal Reserve cutting interest rates by up to 50 basis points before the end of the year.

The global risk premiums increased after Israel broke a two-month ceasefire on Wednesday by launching a new operation in Gaza.

In retaliation to the attacks by the Houthi group on ships in Red Sea, the United States continued airstrikes against Houthi targets throughout Yemen. Donald Trump, the U.S. president, has also promised to hold Iran accountable for any future Houthi attack.

On Wednesday, Ukrainian president Volodymyr Zelenskiy stated that a stop to strikes on energy installations in the war against Russia could be quickly. This suggests both sides are moving closer to an agreement which could lead to a cessation of hostilities and a return of Russian supplies to the market.

Steve Witkoff is Trump's Middle East Envoy. He has announced that a second round of talks between Russian and U.S. officials will take place in Saudi Arabia this Sunday to try to stop the war. (Reporting and editing by Tom Hogue, Clarence Fernandez, and Colleen Waye)

(source: Reuters)