Aug 16 2024: Oil prices are on track for a second consecutive week of gains, despite a slight decline on Friday. Recent positive U.S. economic data has bolstered optimism about demand from the world’s largest oil consumer.
This week, Brent crude futures have risen approximately 1.3%, while U.S. West Texas Intermediate (WTI) crude futures have increased around 1.2%.
As of Friday morning (0650 GMT), Brent dipped by 22 cents, or 0.3%, to $80.82 per barrel, while WTI dropped 30 cents, or 0.4%, to $77.86 per barrel.
U.S. retail sales data released on Thursday exceeded analysts’ expectations, and separate reports showed a decline in new unemployment claims, fueling renewed optimism about U.S. economic growth.
“Crude oil has rebounded from recent losses, driven by positive economic indicators and supply-side concerns, which have lifted investor sentiment,” noted analysts at ANZ Research.
Consultants at FGE highlighted that the oil markets are likely to shift their focus back to geopolitical developments, particularly following Iran’s warnings of retaliatory actions against Israel after the assassination of a Hamas leader in Tehran.
On Thursday, a new round of negotiations began to secure a ceasefire in the Gaza conflict, even as Israeli forces continued their operations in the Palestinian territory. The talks, which Hamas has boycotted, were extended and are set to resume on Friday in Doha, Qatar.
Meanwhile, Chinese refineries significantly reduced their crude processing rates last month due to weak fuel demand, exerting downward pressure on oil prices.
The Organization of the Petroleum Exporting Countries (OPEC) on Monday revised down its demand forecast for this year, citing lower-than-expected growth in China. “Despite a rise in U.S. crude oil inventories last week, demand for gasoline and distillates remains robust. This trend is not mirrored in China, where apparent oil demand fell 8% year-on-year in July,” according to ANZ analysts.