Oil prices rose more than 1 percent on Thursday after U.S. retail data weakened the dollar, sparking a sell-off, but investors focused on a report from the International Energy Agency (IEA) that suggests demand growth is slowing this year. IEA lowered its 2024 oil demand growth forecast.
Brent crude futures rose $1.26, or 1.5%, to $82.86 a barrel. WTI crude oil futures rose $1.39, or 1.8%, to $78.03.
The US dollar index fell about 0.3% after data showed US retail sales fell more than expected in January. A weakening of the dollar generally increases oil sales because it makes the commodity cheaper for those who hold other currencies.
Retail sales fell 0.8% last month, the Commerce Department’s Census Bureau said Thursday. December data has been revised to show sales increased by 0.4% instead of 0.6% as previously reported.
The data increased optimism about the Fed’s future interest rate cuts. It means positive developments in oil demand as interest rate cuts are put back on the table.
However, oil prices weighed on Thursday with an IEA report saying global oil demand was losing momentum, prompting the agency to cut its 2024 growth forecast to 1.22 million barrels per day (bpd) from 1.24 million barrels per day (bpd).
On the supply side, the IEA has forecast that supply will increase by 1.7 million barrels per day this year, considering its previous forecast of 1.5 million barrels per day.
Crude oil stocks in the USA increased more than expected. Brent and WTI lost more than $1 a barrel on Wednesday, pressured by a rise in U.S. crude inventories as refining fell to their lowest levels since December 2022.
News that two major economies have entered recession also put pressure on prices. The recession in the UK and Japan is putting pressure on prices.
Official data showed that the UK entered a recession in the second half of 2023, with gross domestic product (GDP) shrinking by 0.1% in the third quarter and 0.3% in the fourth quarter.
Japan unexpectedly entered a recession at the end of last year and lost its title as the world’s third-largest economy to Germany.
