Oil prices on Friday hit highs not seen in four weeks, as a positive economic report offset continuing concerns about a global supply glut, USA Today reports.
The price of West Texas Intermediate crude oil, the U.S. benchmark, rose 3.2% to $34.13 at 9:06 a.m. The price of Brent crude, the global benchmark, rose 3.8% to $36.62.
The increases came after a report that U.S. gross domestic product rose by a seasonally adjusted rate of 1% in the fourth quarter of 2015, more than the previous estimate of 0.7% and above expectations for a downward revision to 0.4%.
The report from the U.S. Commerce Department allayed some fears of recession. A better economy typically means greater consumption of oil, which can increase prices.
But this time may be different. Oil analysts say that the global glut of oil is more than enough to absorb increased demand, likely leading to a prolonged period of low prices.
U.S. oil production fell for a fifth consecutive week—now down 130,000 barrels per day from its mid-January peak. But crude oil stored in commercial tanks reached 507.6 million barrels, an all-time high according to Capital Economics.
And Saudi oil minister Ali Al-Naimi told a conference in Houston earlier this week that the Organization of the Petroleum Exporting Countries (OPEC) will not make any production cuts. He suggested that Saudi Arabia is prepared to allow oil to fall to $20 per barrel and that high-cost operators must cease pumping.
