Oil prices edge lower but set to end week over 3 per cent higher

Oil prices edged lower on Friday but were on track to gain over 3 per cent for the week, boosted by the International Energy Agency raising its 2024 oil demand forecasts and an unexpected decline in US stockpiles.

Brent crude oil futures were down 45 cents or 0.6 per cent to $84.83 a barrel at 1155 GMT, a day after topping $85 a barrel for the first time since November. US West Texas Intermediate (WTI) crude was down 47 cents or 0.6 per cent to $80.70.

“Crude futures were staging a mild retreat from fresh four-month peaks … likely entering a consolidation phase to await further direction,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Prices had remained range-bound for much of the last month roughly between $80 to $84 a barrel before the IEA on Thursday raised its view on 2024 oil demand for a fourth time since November as Houthi attacks disrupt Red Sea shipping.

World oil demand will rise by 1.3 million bpd in 2024, the IEA said in its latest report, up 110,000 bpd from last month. It forecast a slight supply deficit this year should OPEC+ members sustain their output cuts having previously forecast a surplus.

The gains this week have come despite the US dollar strengthening at its fastest pace in eight weeks. A stronger dollar makes crude more expensive for users of other currencies.

Also supporting prices were Ukrainian strikes on Russian oil refineries, which caused a fire at Rosneft’s biggest refinery in one of the most serious attacks against Russia’s energy sector in recent months.

US crude oil stockpiles also fell unexpectedly last week as refineries ramped up processing while gasoline inventories slumped as demand rose, the Energy Information Administration said on Wednesday.

On the demand side, China’s central bank left a key policy rate unchanged as authorities continued to prioritise currency stability amid uncertainty over the timing of expected US Federal Reserve interest rate cuts.

Lower interest rates cut consumer borrowing costs, which can boost economic growth and demand for oil.

In the United States, some signs of slowing economic activity were seen as unlikely to spur the Federal Reserve to start cutting interest rates before June as other data on Thursday showed a larger-than-expected increase in producer prices last month.