In line with robust demand and a more significant drop in US oil inventories than anticipated, oil prices climbed on Friday and are set to register a consecutive weekly increase, mitigating apprehensions of surging US interest rates.

As of 06:15 GMT, Brent crude futures saw a 45 cents, or 0.6%, uplift, reaching $76.97 a barrel, while US West Texas Intermediate crude advanced by 44 cents, or 0.6%, landing at $72.24 a barrel.

Both standards are projected to achieve a 2% rise for two successive weeks.  Edward Moya, an analyst at OANDA said, “As we move into the peak summer travel season in the U.S., and given the successful price increase by Saudis to Europe and Asia, the crude demand prognosis is turning positive.”

The Energy Information Administration reported a larger-than-forecast decline in US crude stocks due to robust refining demand, and a substantial drop in gasoline inventories following a rise in driving last week. This coincides with announcements of new output reductions for August by leading oil exporters Saudi Arabia and Russia. The cumulative cuts now exceed five million barrels per day (bpd), approximating 5% of worldwide oil output.

However, prospects of U.S. central bank hiking interest rates at its meeting scheduled for July 25-26, after maintaining rates at 5%-5.25% in June, have limited oil price advancements. Recent data reveals a moderate increase in unemployment benefit claims last week, while private payrolls experienced a surge in June, amplifying the odds of a Federal Reserve rate hike this month.

When OPEC releases its maiden outlook later this month, it is expected to retain a positive perspective on oil demand growth for the forthcoming year. Despite predicting a deceleration from this year, an above-average increase is still projected, according to sources close to OPEC.

Rising interest rates enhance borrowing costs for businesses and consumers, potentially curbing economic growth and diminishing oil demand. Investors will be closely observing U.S. and China inflation data next week for indications on rate paths.

“Oil seems to have established a solid base this week and may continue to ascend, provided global recession concerns remain under control,” said Moya.