Oil looks set to test three-year high as supplies tighten

Oil prices rose for a fourth day on Friday, taking Brent towards three-year highs, as investors focused on tighter supplies amid strong appetite for riskier assets like crude and high hopes for recovery from the pandemic.

Brent crude was up 40c, or 0.5% at $77.65 a barrel, by 0037 GMT, after touching a two-month high on Thursday and closing at its highest since October 2018.

US oil was up 27c, or 0.4%, at $73.57 a barrel, having closed 1.5% in the previous session, the highest since the start of August.

“Crude prices appear to be on a one-way street that is headed higher ... with risk appetite running wild,” said Edward Moya, senior market analyst at Oanda.

In a sign of strengthening fuel demand, capacity utilisation rates at US East Coast refineries increased to 93%, the highest since May 2019, Energy Information Administration (EIA) data showed.

Inventories fell to the lowest in almost three years after damage from two hurricanes kept draws elevated in the US, EIA data earlier in the week showed.

Some members of the Organisation of the Petroleum Exporting Countries (Opec) and allies, known as Opec+, have also struggled to raise output following underinvestment or delays to maintenance work during the worst global health crisis in 100 years.

Still, US oil refiners on the hunt for replacements for the US Gulf crude lost to storms have been able to turn to Iraqi and Canadian oil, while Asian buyers have been switching to pursuing Middle Eastern and Russian grades, analysts and traders said.