Crude prices increased by 2% due to higher U.S. oil demand and lower production

Friday saw an increase in oil prices as energy firms reported positive earnings and U.S. data showed that fuel demand was growing while crude output was decreasing.

Brent futures for June delivery increased $1.13, or 1.49 percent, to $79.50 a barrel on the final day of the front month. At $80.40, the July contract, which is traded more frequently, was up about 2.8%.

U.S. West Texas Intermediate (WTI) crude ended the day at $76.78 a barrel, up 2.7%, or $2.02.

“The market was down much of the week on worries about a looming economic recession and an expansion of the banking crisis with First Republic,” said Phil Flynn, an analyst at Price Futures Group.

“But, today there were headlines showing there may be a solution to the First Republic problem, and there was data pointing to a rise in oil demand and a decline in output,” Flynn said.

Three people who are familiar with the situation say that U.S. officials are coordinating urgent talks to save First Republic Bank because private sector efforts led by the bank’s advisers haven’t worked out a deal.

According to the sources, the Federal Reserve, the Treasury Department, and the U.S. Federal Deposit Insurance Corp. (FDIC) are among the government agencies that have begun to arrange meetings with financial institutions regarding a solution for the First Republic.

The lowest level of crude production seen in the United States since December was 12.5 million barrels per day (bpd) in February. The Energy Information Administration (EIA) reports that fuel demand reached nearly 20 million barrels per day, the highest level since November.

According to Baker Hughes Co., an energy services company, the number of rigs drilling for oil in the United States remained unchanged this week at 591, but it fell by one in April, marking their fifth monthly decline.

Oil companies Exxon Mobil Corp. and Chevron Corp. have resisted cost-cutting measures implemented when fuel demand plummeted during COVID-19 lockdowns. They are riding a wave of strong demand.

Crude prices have fallen in recent weeks and months as a result of uncertainty regarding future interest rate increases, which could reduce oil demand.

Brent lost about 2.6% for the week after losing 5% the previous week, and WTI lost 1.4% after losing 6% the previous week.

Brent finished the month lower by 0.3 percent, and after falling for the previous five months, WTI gained about 1.5 percent in April.

U.S. shopper spending was unaltered in March, yet tenacious strength in hidden expansion tensions could provoke the Fed to climb rates again one week from now to slow expansion, taking care of fears of a potential downturn.