Oil prices stalled on Friday on the International Energy Agency’s (IEA) forecast that demand would slow, after rising in the previous session on weak U.S. retail sales data that signaled optimism that the Fed might cut interest rates sooner than expected.
Brent crude oil futures were down 9 cents, or 0.1%, at $82.77 a barrel at 03:42 GMT. WTI crude oil futures rose 4 cents to $78.07 a barrel.
Both contracts rose above 1 percent on Thursday as a larger-than-expected decline in U.S. retail sales bolstered the possibility that the Fed will start cutting interest rates soon; This could be positive for oil demand.
Retail sales fell 0.8% in January, the biggest decline since February 2023, a U.S. Department of Commerce report showed. Economists had predicted retail sales would fall by 0.1%.
Hopes for a US rate cut provided support on Thursday, but investors will be hedging their positions ahead of the long weekend.
While investors will closely monitor interest rate trends, they will continue to evaluate whether geopolitical risks in the Middle East will be reflected in crude oil supply chains.
Analysts said the risk of a broader conflict of mutual attacks in the Middle East could continue to drive crude oil prices.
Judging by market sentiment, energy watchdog Paris-based International Energy Agency (IEA) said on Thursday that global oil demand growth is losing momentum and lowered its 2024 growth forecast, unlike the Petroleum Exporting Countries (OPEC).
The IEA said in its monthly report that it expects global oil demand to increase by 1.22 million barrels per day (bpd) this year, a slight decrease from last month’s forecast. OPEC on Tuesday stuck to its much steeper growth forecast of 2.25 million barrels.
Recent gains from the rising Middle East risk premium are expected to continue, especially into the weekend. Israel’s attack on Rafah has the potential to increase the reaction of the Houthis, who have been somewhat quiet in the Red Sea lately, and other Iran-backed militias in the region.
