Oil prices fell on Friday but remained on track to rise about 4% throughout the week, as the International Energy Agency (IEA) revised higher its 2024 oil demand forecasts and an unexpected decline in U.S. inventories.
Brent crude oil futures fell 25 cents, or 0.3%, to $85.17 a barrel at 0533 GMT, after surpassing $85 a barrel on Thursday for the first time since November. WTI crude oil fell 22 cents, or 0.3%, to $81.04.
The IEA on Thursday raised its view on 2024 oil demand for the fourth time since November. In its latest report, the IEA said world oil demand will increase by 1.3 million barrels per day in 2024, an increase of 110,000 barrels per day compared to last month. A slight supply deficit is predicted this year after OPEC+ members extended cuts.
Analysts also noted that U.S. oil refinery usage is expected to increase. Refineries, which shut down capacity in January due to the winter cold, are coming into play.
European refining margins are also increasing and there are signs that market balance is tightening.
This week’s gains come despite the U.S. dollar strengthening at its fastest pace in eight weeks. A stronger dollar makes crude oil more expensive for those using other currencies.
Another development that supported oil prices this week was Ukraine’s attacks on Russian oil refineries.
U.S. crude oil inventories also fell unexpectedly last week, the Energy Information Administration (EIA) said on Wednesday, as gasoline stocks fell as demand increased even as refineries ramped up operations.
On the demand side, the People’s Bank of China left its key policy rate unchanged as officials continue to prioritize currency stability due to uncertainty about the timing of the Fed’s expected interest rate cuts.
Low-interest rates lower consumer borrowing costs, which increases economic growth and oil demand.
Some signs of a slowdown in economic activity in the US have shown that it is unlikely to encourage the Fed to start cutting interest rates before June. Other data on Thursday showed a larger-than-expected increase in producer prices last month.
