Oil prices holding gains as demand outlook brightens

Oil prices were lower on Friday but largely held gains that had prices flirting with multi-month highs, as the cleanup after hurricanes in the United States gathered pace and the outlook for demand took on a firmer tone.

In other markets, typically safe haven assets like the yen (=JPY) and gold (XAU=) were higher, after North Korea fired off yet another missile in breach of United Nations sanctions, amid high regional tensions over its nuclear weapons programme.

U.S. West Texas Intermediate crude (CLc1) was down 15 cents, or 0.3 percent, at $49.74 a barrel at 0012 GMT. It briefly broke above $50 to a four-month high on Thursday and finished 1.2 percent higher at $49.89, its highest close since July 31.

Brent crude (LCOc1) futures were down 20 cents, or 0.4 percent, at $55.27 a barrel. They gained 0.6 percent to settle at $55.47 the previous session, the highest close since April 13.

“The psychological barrier of $50 per barrel remains a big hurdle for WTI, after it failed to settle above it once again,” ANZ bank said in a research note.

Nevertheless, U.S. crude is on track for a nearly 5 percent gain this week, buoyed by the return of refineries after Hurricane Harvey and stronger indications of demand.

Brent is heading for a 3 percent gain and a third consecutive weekly rise.

On Wednesday, the IEA said a global oil glut was shrinking thanks to strong European and U.S. demand, as well as production declines in OPEC and non-OPEC countries.

The Organization of the Petroleum Exporting Countries (OPEC) earlier forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut.

BP Chief Executive Bob Dudley told Reuters in an interview that oil prices were likely to stay between $50 and $60 as major producers kept output restricted.
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