Oil heads for weekly gain on solid 2024 demand outlook

NEW YORK -Oil futures prices edged higher on Friday and were on course for their best week in months, supported by forecasts for solid crude oil and fuel demand in 2024.

Brent crude futures were up 12 cents at $82.87 a barrel at 1:34 pm EDT . West Texas Intermediate U.S. crude futures were up 7 cents at $78.69.

Brent and the U.S. benchmark have gained roughly 4% over the week, which if sustained would mark both benchmarks’ highest weekly rise in percentage terms since April.

Although prices were up on Friday, an unexpected deterioration of U.S. consumer sentiment capped gains.

U.S. consumer sentiment weakened in June to a seven-month low as inflation and income worries linger, a survey showed on Friday.

“The data came in way lower than expected,” said Bob Yawger, director of energy futures at Mizuho. “That implies the average consumers don’t have confidence the economic situation is improving.”

Earlier this week oil prices ticked up on forecasts for strong demand.

The U.S. Energy Information Administration upgraded its oil demand growth estimate for 2024 slightly, and the Organization of the Petroleum Exporting Countries stuck to a forecast for relatively strong growth of 2.2 million barrels a day .

The International Energy Agency meanwhile cut its demand growth forecast to under 1 million bpd.

However, all three forecasters predicted a supply deficit at least until the beginning of winter, Commerzbank analysts highlighted.

The rally cooled somewhat after the U.S. Federal Reserve kept interest rates on hold, with the start of rate cuts unlikely before December.

“In view of the still uncertain economic outlook for the major economic regions, a further price increase is not to be expected for the time being,” said Commerzbank analyst Barbara Lambrecht.

The U.S. active oil rig count, an early indicator of future output, fell by four to 488 this week to its lowest since January 2022, energy services firm Baker Hughes said.

Elsewhere, Russia pledged to meet its output obligations under the OPEC pact after saying it exceeded its quota in May.

Prices dipped last week after OPEC and its allies said they would phase out output cuts starting from October.

“No matter how many times it promises to make up for poor compliance at a future date, the market just sees more oil and an agreement that might just possibly unravel,” said PVM analyst John Evans.

Market focus is also on Gaza ceasefire talks, which could alleviate concerns about potential disruption to oil supply from the region.

This article was generated from an automated news agency feed without modifications to text.

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Published: 14 Jun 2024, 11:38 PM IST

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