Oil pushes above $108 on earnings, economy optimism

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Brent oil rose to above $108 a barrel on Friday, supported by lower inventories in the United States, and as firm results from JPMorgan and Wells Fargo increased investor appetite for risk.

Brent crude for August was 42 cents higher at $108.15 a barrel by 1336 GMT.

The contract was little changed for the week after pulling back from $108.93 on Thursday, the highest since April 3.

U.S. crude was up 38 cents at $105.29.

U.S. stock indexes hit record highs on Thursday, and riskier assets including oil were supported after Federal Reserve Chairman Ben Bernanke said the U.S. central bank will keep a loose monetary policy for some time to lower unemployment.

Strong results from JPMorgan and Wells Fargo on Friday helped to strengthen investor conviction that the economic picture in the United States and beyond would brighten further.

Tight supply was also behind stronger prices. U.S. data on Wednesday showed the biggest two-week drop on record in crude stockpiles, while refinery production hit a five-year high.

New York Harbor gasoline futures were up 1.5 percent and on Thursday topped $3 per gallon for the first time since March with the onset of the summer driving season.

"The positive earnings tied in with lower inventories is feeding into better sentiment and pushing oil higher," said Michael Hewson, analyst at CMC Markets.

Lingering worries that violence in Egypt could disrupt supply through the Suez canal also helped underpin prices.

CHINA CONCERN

These factors outweighed concern about China's demand outlook, and the prospect of growing non-OPEC supply offset lower inventories in the United States.

China's finance minister signalled that Beijing may be willing to tolerate economic growth in the second half of the year, significantly below 7 percent, marking the most sobering comment to date from a senior policymaker on the country's slowdown.

That came after warnings from China earlier this week of a "grim" outlook for trade after a surprise fall in June exports, raising concerns that the world's second biggest oil consumer would no longer be the buoyant force for oil it has been for the last decade.

Brent remains close to a three-month peak reached the session before on political uncertainty in Egypt, falling U.S. crude inventories and a weaker U.S. dollar

Capping gains, non-OPEC supply is set to grow at the fastest pace in decades next year, the International Energy Agency (IEA) said on Thursday.



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