Oil prices edged higher on Friday with Brent poised for its first monthly gain this year, as a big drawdown in U.S. oil stocks outweighed concerns that fuel demand will be dented further by more interest rate hikes.
Brent crude futures for September delivery rose 16 cents or 0.2% to stand at $74.67 as of 0405 GMT. The less-traded front month contract , which expires on Friday, was up 30 cents at $74.64.
U.S. West Texas Intermediate crude (WTI) gained 8 cents or 0.1% to $69.95.
After settling marginally higher on Thursday, both benchmarks were on track to climb more than 2.5% for June. While it would be Brent's first monthly gain for 2023, it would mark a second for WTI after a gain in April.
Despite the probably monthly gain, on a quarterly basis, Brent looks set for a loss of around 6% while WTI appears headed for a decline of about 7%.
Markets are worried about tightening supply after the U.S. Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million-barrel draw analysts had forecast in a Reuters poll.
Meanwhile, U.S. gross domestic product (GDP) in the first quarter was revised up to a 2.0% annualized rate from the 1.3% pace reported previously.
"A significant upward revision (of U.S. GDP data) adds to the list of positive economic surprises in the US lately, with economic resilience aiding to calm some nerves around recession concerns, at least for now," Yeap Jun Rong, market analyst at IG, said in a note to clients.
The strong U.S. economic data and oil stock drawdown comes at a time when Saudi Arabia is planning to further cut output by 1 million barrels per day in July. That's in addition to a broader OPEC+ deal to limit supply into 2024.
Refinitiv data showed Russia's seaborne oil exports from Primorsk, Ust-Luga and Novorossiisk will fall to 1.9 million barrels per day (bpd) in July from 2.3 million bpd in June as domestic refineries increase runs, which could further tighten global crude oil supply.
The oil price gains on Friday were, however, capped by weak Chinese economic data and fears of interest rate hikes.
The data was largely in line with analysts' forecasts.
"It was not much of a surprise to see...though perhaps the fact that the contraction is relatively stable is a source of some comfort. At least things aren't getting noticeably worse," Robert Carnell, regional head of research at ING, said in a note.
In the U.S., the Federal Reserve is likely to resume its rate-hike campaign after a break earlier this month, Fed Chair Jerome Powell signaled on Thursday after a fresh slew of stronger-than-expected economic data.
U.S. oil rig count data, an indicator of future supply, will be released later in the day.
