Brent and U.S. crude oil futures finished with a small loss after an up-and-down session that saw prices drop more than $1 a barrel on Friday as traders weighed mixed signals about oil demand next year.
Brent futures fell 6 cents, or 0.08%, to settle at $76.55 a barrel. West Texas Intermediate (WTI) crude fell 15 cents, or 0.21%, to close at $71.43.
The market fell earlier in the session after the Federal Reserve Bank of New York’s manufacturing survey showed a third month of declines in new orders, a sign that oil demand will weaken next year.
A sharp decline in New York manufacturing figures caused the sell-off. The market seems to be a little more sensitive to each new headline, and investors still aren’t sure if they’ve seen the bottom of this market. Investors were also shaken by comments Friday from New York Federal Reserve Bank President John Williams about hopes for a rate cut next year.
Williams said, “We are not talking about a rate cut right now” and said it was too early to consider lowering interest rates.
On Thursday, Fed Chairman Jerome Powell said interest rate hikes aimed at curbing inflation were probably over but left open the possibility of further increases.
The dollar fell to a four-month low on Thursday after Powell’s comments and signs that borrowing costs will fall in 2024. The dollar index was generally stable on Friday.
The weakening of the dollar makes dollar-denominated oil cheaper for foreign buyers.
In its monthly report, the IEA stated that world oil consumption will increase by 1.1 million barrels per day (bpd) in 2024.
While this is an increase of 130,000 barrels per day from the previous estimate, the forecast is less than half of the Organization of the Petroleum Exporting Countries (OPEC) demand forecast of 2.25 million barrels per day.
As known, OPEC+ agreed in late November to voluntary cuts of about 2.2 million barrels that will last through the first quarter.
Money managers are reducing their net long U.S. crude futures and options positions through Dec. 12, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Another bullish signal for oil markets on Friday was the decrease in the number of rigs. Baker Hughes said U.S. oil rigs fell by 2 this week to 501, while gas rigs remained unchanged at 119. This brings the rig count down from its post-pandemic high of 784 in December 2022 due to the decline in oil and gas prices.
