By Florence Tan
SINGAPORE (Reuters) -Oil prices extended gains on Friday and headed for a second weekly gain, supported by geopolitical tensions in Europe and the Middle East, concerns over tightening supply and optimism about global fuel demand growth as economies improve.
climbed 59 cents, or 0.7%, to $91.24 a barrel by 0646 GMT. U.S. West Texas Intermediate crude was at $87.02 a barrel, up 43 cents, or 0.5%.
Both benchmarks settled at their highest since October on Thursday.
“Oil prices look set for further upside in the short term as a more positive economic backdrop is joined by ongoing supply tightness and rising geopolitical risks,” ANZ analysts Daniel Hynes and Soni Kumari said in a note, as the bank raised its three-month price target for Brent to $95 a barrel.
Brent and WTI are set to notch a more than 4% gain this week, climbing for a second straight week, after third-largest OPEC producer Iran vowed revenge against Israel for an attack that killed high-ranking Iranian military personnel.
Israel has not claimed responsibility for the attack on Iran’s embassy compound in Syria on Monday.
Ongoing Ukrainian drone attacks on refineries in Russia may have disrupted more than 15% of Russian capacity, a NATO official said on Thursday, hitting the country’s fuel output.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, this week kept their oil supply policy unchanged and pressed some countries to increase compliance with output cuts.
“Further clampdowns on adherence to quotas should see output fall further in Q2,” the ANZ analysts said.
“The prospect of a tighter market should see a drawdown in inventories during the second quarter.”
Heavy oil supply has also tightened globally after Mexico and the United Arab Emirates cut exports of these grades.
This comes amid solid global oil demand growth of 1.4 million barrels per day (bpd) in the first quarter, JPMorgan analysts said in a note.
“Our high-frequency demand indicators estimate that total oil consumption in March averaged 101.2 million bpd, 100,000 bpd above our published estimates,” they said.
Investors are awaiting a U.S. March employment report later on Friday for further clues on the health of the U.S. economy and the direction of its monetary policy.