Oil traded near a two-month high with global equity markets at a record and shrinking U.S. inventories boosting optimism of a summer rally.

Brent crude traded around US$87 a barrel, headed for a fourth weekly advance, with a recent rally aided by positive sentiment across markets. The biggest drop in U.S. stockpiles in almost a year signaled tightening supplies this week.

The risk of Hurricane Beryl to production in the Gulf of Mexico has eased, but its early appearance highlighted concerns of a “supercharged” storms season adding risks to fuel markets in the coming weeks.

Crude has been on a slow and steady grind higher since the beginning of June partly due to a positive outlook for demand over the Northern Hemisphere summer, with bullish, backwardated timespreads signaling healthy near-term consumption.

“There is little to doubt the voracity of the current rally in oil prices,” said John Evans, an analyst at brokerage PVM. “The many calls of a much better path for bulls in the third quarter at present seem to hold true.”

Traders will be watching for data on U.S. employment later on Friday, which may inform the outlook for monetary policy.

Signs of softer demand in Asia have tempered some of the recent optimism, and led Saudi Aramco to slash prices of its crude to the region for a second month.

Prices:

• Brent for September settlement was little changed at $87.38 a barrel at 10:14 a.m. in London
• WTI for August delivery edged up 0.1% from Wednesday’s close to $83.99 a barrel