Oil prices rose on Friday and secured their fourth straight weekly gains after global demand said it would hit a record high this year.
The International Energy Agency (IEA) also warned that the deep production cuts announced by the producer group, including Russia, known as OPEC+, could exacerbate the oil supply gap and harm consumers. According to the IEA, global oil supply will fall by 400,000 barrels per day by the end of the year, while world demand will increase by 2 million barrels per day in 2023.
Brent crude futures were up 22 cents, or 0.3%, at $86.31 a barrel. West Texas Intermediate crude futures (WTI) were up 36 cents, or 0.4%, at $82.52 a barrel.
Both contracts were up for the fourth week in a row as concerns over a banking crisis of last month eased and OPEC+ made a surprise decision to cut production further last week.
Brent posted 1.5% weekly gains, while WTI posted 2.4% weekly gains. The four-week increments will be the longest series since June 2022.
The IEA said in its monthly report Friday that world oil demand will increase by 2 million barrels per day in 2023 to a record 101.9 million barrels per day, mostly due to increased consumption in China following the lifting of COVID restrictions.
Jet fuel demand is said to account for 57% of 2023 gains.
But on Thursday, OPEC pointed to downside risks to oil demand in the summer as part of its decision to cut production by an additional 1.16 million barrels per day.
Faced with inflated prices for essentials, consumers will now have to distribute their budgets even more finely. This bodes well for economic recovery and growth.
The IEA said it expects global oil supply to drop by 400,000 barrels per day by the end of the year, and production from outside OPEC+ is expected to increase by 1 million bpd from March, despite a 1.4 million bpd drop from the producer block.
The number of US oil and gas rigs, which fell for the third week in a row, an indicator of future supply, also helped boost prices, according to Baker Hughes data. U.S. oil rigs fell two this week to 588, the lowest since June 2022, while gas rigs dropped one to 157.
The published US dollar index raised expectations that the Fed is nearing the end of its rate hike cycle.
Still, the dollar rose on Friday, making dollar-denominated oil more expensive for investors holding other currencies and capping oil prices.
