Oil prices rose on Friday, and are on track for their first weekly rise in two months, following the International Energy Agency’s optimistic forecast for oil demand next year and a weakening dollar.
Brent futures were up 21 cents at $76.82 a barrel at 06:40 GMT. West Texas Intermediate (WTI) crude oil rose 20 cents to $71.78.
Both benchmarks are on track for a modest weekly gain, rising following the Federal Reserve’s midweek announcement that it will likely lower borrowing costs next year.
The US Federal Reserve (Fed) kept the policy rate unchanged within expectations and kept it constant at 5.25-5.50 percent, the highest level in 22 years.
Oil prices may see some demand due to improved liquidity conditions following the Fed’s dovish policy.
The dollar fell to a four-month low on Thursday after the US central bank said interest rate hikes were likely over and borrowing costs would fall in 2024.
A weak dollar makes dollar-denominated oil cheaper for foreign buyers.
Meanwhile, the European Central Bank on Thursday disputed claims of an imminent cut in interest rates, confirming that borrowing costs will remain at record highs despite low inflation expectations.
World oil consumption will rise by 1.1 million barrels per day (bpd) in 2024, the IEA said in a monthly report, up 130,000 bpd from its previous forecast, citing an improvement in the outlook for U.S. demand and lower oil prices.
EIA’s 2024 forecast is less than half of the Organization of Petroleum Exporting Countries (OPEC) demand growth forecast of 2.25 million barrels per day.
Weak economic data from China, the world’s second-largest oil consumer, has increased the pressure on oil prices in recent weeks.
Data released by the country’s statistics bureau on Friday showed that refinery activity in November fell to its lowest level since the beginning of 2023. This is due to margin pressure on non-state-owned refineries causing them to cut production and slowing diesel consumption putting pressure on national fuel demand.
Despite ongoing woes in China’s real estate market, the data also showed a better-than-expected performance in industrial production and retail sales, providing some relief to market sentiment as the country struggles with a post-COVID-19 economic recovery.
