Oil prices fell on Friday as markets weighed the impact of a longer-than-expected US interest rate hike, but crude benchmarks headed for their best week in more than two months after solid forecasts on the demand for crude oil and fuel.
Brent crude futures were down 34 cents, or 0.4%, at $82.41 a barrel at 0344 GMT. U.S. West Texas Intermediate (WTI) crude futures lost 41 cents, or 0.5%, to trade at $78.21 a barrel.
However, Brent and the US benchmark gained more than 3% for the week – the best week since April 5.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast of relatively strong growth in global oil demand for 2024, and Goldman Sachs forecast solid fuel demand in the United States this summer.
That helped reverse the previous week’s losses, driven by an agreement between OPEC and its allies, together called OPEC+, to begin cutting output after September.
“Overall, this week can be characterized as a recovery effort for oil,” said Tim Waterer, chief market analyst at Australia-based KCM Trade.
“I wouldn’t be surprised to see oil prices rise from here on out as the demand outlook continues to look brighter. Much will depend on the Northern Hemisphere summer demand picture.”
Further supporting the market, Russia pledged to meet its production obligations under the OPEC+ pact, after saying it exceeded its quota in May.
However, this week’s price rally cooled after the US Federal Reserve kept interest rates steady and postponed the start of rate cuts to December.
Meanwhile, the International Energy Agency said in a report on Wednesday that it sees oil demand reaching its peak by 2029, stabilizing at around 106 million barrels per day (bpd) towards the end of the decade.
On the negative side, concerns about the economic outlook have increased following the Fed’s rate cut vision, but that said, to the extent this supports the US dollar, it could offer a measure of support to Brent, analysts at BMI in a note.
Market attention is also focused on ongoing ceasefire talks in Gaza, which, if resolved, would ease concerns about potential disruptions to oil supplies from the region.
The United States is very concerned that hostilities on the border between Israel and Lebanon could escalate into a full-blown war, a senior US official said, saying that area-specific security arrangements are needed and that a ceasefire in Gaza is not enough. (Service by Ashitha Shivaprasad in Singapore, additional services by Katya Golubkova in Tokyo; editing by Michael Perry)
