Oil prices rose slightly on Friday but are on their way to decline for a third week as concerns about supply disruptions from the Israel-Hamas conflict ease and demand concerns re-emerge.
Brent crude futures for January were up 41 cents, or 0.5%, at $80.42 a barrel at 0550 GMT, while the West Texas Intermediate (WTI) crude futures for December were at $76.06, up 32 cents, or 0.4%.
Brent futures are down 5.7% this week, while WTI is down 5.9% since last week. The three-week declines were the longest weekly losing streak for either contract since a four-week decline from mid-April to early May.
The threat of supply disruptions from the Middle East continues to diminish. Supply problems, which are expected to escalate if neighboring Arab countries show their discontent, have been brought under control.
Israel has agreed to halt military operations in some areas of northern Gaza for four hours a day, the White House said Thursday, but there is no sign of a full end.
The indication that supply disruptions resulting from the Israel-Hamas conflict are revealed in an analysis of data on demand, particularly from China, the world’s largest oil importer.
Weak economic data from China this week has raised concerns about declining demand. Additionally, refiners in China, the largest buyer of crude oil for Saudi Arabia, the world’s largest exporter, requested less supply from Saudi Arabia for December.
But analysts say they expect the downward pressure to ease and prices to recover after falling to their lowest level since July earlier this week.
Price consolidation is expected and near-term price forecasts remain, with support expected to come from the easing of refinery maintenance and the change in risk return for investors following the recent sell-off.
While supply risks in the Middle East remain high, upside risks from current levels remain, with the potential for the Organization of Petroleum Exporting Countries and its allies to take action to protect prices.