By Barani Krishnan

Investing.com – Oil bulls were on to an eight winning week on Friday as Brent hit $85 per barrel, nearing Wall Street’s $90 call, as strong U.S. retail sales and a rebounding stock market fed risk appetite despite exploding inflation.

News of China cutting crude oil import quotas by independent refiners as well as U.S. inventory numbers from Thursday point to a third week of crude stockpile growth were put aside. 

On Friday, the White House made an announcement that it would lift COVID-19 travel restrictions on fully vaccinated foreigners effective Nov. 8 and this should increase jet fuel demand. 

Also ringing in oil bulls’ ears were the International Energy Agency’s estimate on Thursday that the energy crunch would leave the global market short of 500,000 barrels per day — estimated by some to be as high as 700,000 bpd.

“It will take a trifecta of events to derail this oil price rally: OPEC+ unexpectedly boosts output, warm weather hits the northern hemisphere, and if the Biden administration taps the strategic petroleum reserves,” said Ed Moya, analyst at online trading platform OANDA.

By 1:00 PM ET (1700 GMT), U.S. crude’s benchmark was up 78 cents, or almost 1%, at $82.09 per barrel. It reached $82.48, the highest level since 2014. WTI gained 3.4% in the past week, marking its eighth consecutive weekly gain. This has resulted in a 32% cumulative increase for the benchmark U.S. crude oil. WTI rose almost 70% in 2021. 

London-traded crude, the global benchmark for oil, was up  68 cents, or 0.8%, at $84.68 after a three-year high at $85.09. Both Goldman Sachs and Morgan Stanley  have called for $90 Brent before the end of the year.

Brent also saw a 2.8% week-end gain, which was the sixth consecutive weekly gain. This resulted in a 17% cumulative gain. Brent rose 63% for the year.

Oil’s latest run-up came after US retail sales numbers for September released by the Commerce Department on Friday showed a growth of nearly 14% on the year and a steady monthly expansion of 0.7% since August.

Investing.com tracked economists and they expected a 0.2% monthly drop in September retail sales, mainly due to inflation caused by the pandemic.

Instead, most of the key sectors of the economy had positive sales last month. This is good news for the holiday shopping season, which typically occurs in October-December, as holidays such as Christmas, Thanksgiving, or Halloween take place.

Retail sales rose, extending gains in the. The previous session saw its strongest day in seven years. Due to concerns about runaway inflation, the U.S. Stock Index had been unable to rally for two weeks.

China is reported to have reduced crude oil imports quotas to independent refiners to reduce their oil market power.

According to Reuters, 14.89 million tonnes is the current crude import quota for independents. The total amount for 2019 is 177.14 millions tons. This compares to 2020’s 184.55million tons.

This would be a very bearish development for oil. But as OilPrice’s Irina Slav noted; “there is so much going on for the bulls it’s likely that the effect of what amounts to a future decline in Chinese oil imports will be temporary”.

The Energy Information Administration also reported Wednesday that the U.S. grew by 6.09 Million barrels during the week to October 8. This follows the 4.58-million and 2.35 million builds over the past two weeks. 

The build came as weekly U.S. refiner activity remained stubbornly below the typical 90% of capacity for this time of year, ostensibly due to WTI pricing — which even some refineries feel had gone up too much, too fast.