Oil rose on Friday, marking the strongest weekly gains in two months as data showing a rise in business spending lifted markets.
A rise in August business spending added to signs of a recovery in the US economy, outweighing a lackluster report on new home sales in August and boosting US stocks.
Oil also was boosted by a surprise rise in Germany’s Ifo index of business sentiment.
US crude for November delivery rose $1.31, or 1.74 percent, to settle at $76.49 a barrel. For the week, oil rose $2.83, or 3.84 percent, the biggest percentage rise since oil jumped $2.97, or 3.91 percent in the week to July 23.
ICE Brent November crude rose 76 cents to settle at $78.87 a barrel on Friday, having traded as high as $79.40.
Oil found support this week following comments from the US Federal Reserve, which said on Tuesday it would keep interest rates exceptionally low and that it was prepared to provide additional accommodation if needed to support recovery.
“The increased odds of quantitative easing (by the Fed) adds to the expectation that the dollar will be weaker. The market seems to have priced in the high inventories and weak demand and turned its focus back to the dollar,” said Phil Flynn, analyst at PFGBest Research in Chicago.
Under quantitative easing, central banks flood the banking system with masses of money to promote lending. They usually do this when lowering official interest rates no longer is effective because they already are at or near zero.
The US economy’s recovery from the deepest recession since the 1930s has stalled, with sluggish growth and unemployment remaining stubbornly high, dampening expectations for a recovery in oil demand.
US total petroleum inventories have soared and last week reached their highest since weekly records began in 1990, according to the Energy Information Administration.
Since May, crude prices have been hemmed in between the $64.24 intraday low on May 20, the weakest front-month price since July 30, 2009, and the 2010 peak of $87.15 set on May 3.
Oil analysts and brokers also eyed Tropical Storm Matthew in the Caribbean Sea, which may disrupt Mexican infrastructure but on Friday was not expected to threaten US energy operations in the Gulf of Mexico.