Oil prices set for first weekly gain in two months
Oil prices climbed on Friday, poised for their first weekly increase in two months, buoyed by an optimistic demand outlook from the International Energy Agency (IEA) for next year and the impact of a weaker dollar.
Brent futures gained 21 cents, reaching $76.82 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 20 cents to $71.78, indicating a positive trend in oil prices.
The optimistic outlook from the U.S. Federal Reserve earlier this week contributed to a modest weekly gain for both Brent and U.S. West Texas Intermediate (WTI) crude, signaling a positive trend in oil prices.
„Oil prices may see a bit of a ‚demand pull‘ due to improved liquidity conditions after the Fed’s dovish pivot,“ said an analyst at OANDA in Singapore, Kelvin Wong.
The U.S. dollar hit a four-month low on Thursday following signals from the U.S. Federal Reserve that interest rate hikes have likely concluded, with lower borrowing costs anticipated in 2024.
A weakened dollar makes dollar-denominated oil more affordable for foreign buyers.
The European Central Bank resisted expectations of imminent interest rate cuts, reaffirming that borrowing costs would remain at record levels despite lower inflation expectations.
World oil consumption is expected to increase by 1.1 million barrels per day (bpd) in 2024, as per the IEA’s monthly report, reflecting an improvement in the U.S. demand outlook and lower oil prices.
The IEA’s 2024 estimate for world oil consumption, at 1.1 million barrels per day, is less than half of OPEC‚s forecast of 2.25 million bpd for demand growth.
Weak economic data from China, the world’s second-largest oil consumer, has added pressure on recent oil prices.
China’s weak economic data continued, with refinery runs in November dropping to their lowest level since the start of 2023, as margin pressure on non-state-owned refiners led to production cutbacks, and sluggish diesel consumption weighed on national fuel demand.
China’s industrial output showed better-than-expected performance, coupled with improving retail sales, providing some relief to market sentiment amid the country’s anaemic post-COVID economic recovery.
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