Oil rose on Friday after the International Energy Agency’s (IEA) forecast record global demand and tighter supply, pushing prices for the seventh week in a row, the longest streak since 2022.
Brent crude futures rose 41 cents, or 0.5%, to $86.81 a barrel, while West Texas Intermediate (WTI) crude futures rose 37 cents, or 0.5%, to $83.19 a barrel.
On a weekly basis, both benchmarks rose about 0.5%.
The IEA estimates that global oil demand hit a record 103 million bpd in June and could hit another peak this month. Tightened oil stocks could push oil prices higher.
Production cuts from Saudi Arabia and Russia also set the stage for a sharp drop in inventories for the remainder of 2023, which the IEA said could push oil prices further.
The Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it expects global oil demand to increase by 2.44 million barrels per day this year, unlike its forecast earlier. OPEC announced that expectations for the oil market look healthy for the second half of the year.
Supply cuts and an improved economic outlook have created more optimism among oil investors. However, there are signs that momentum is weakening after a sustained rally. On Thursday, Brent hit its highest level since January, a day after WTI hit this year’s high.
Brent’s most recent seven-week rise was in the January-February 2022 period before Russia’s invasion of Ukraine.
US economic data this week also boosted market sentiment, fueling speculation that the Federal Reserve’s aggressive rate hikes are nearing the end.
Baker Hughes said the number of oil rigs operating in the U.S., an early indicator of future production, remained steady at 525 this week after falling for eight consecutive weeks. The fixed number of oil rigs indicates that US producers are maintaining discipline in drilling and exploration.
Naturally, the oil price continues to rise at a time when many uncertainties prevail and companies do not dare enough to search for oil.
Mixed economic data from China dampened the mood this week. Customs data showed crude oil imports rose year-over-year, while overall China’s exports fell 14.5% in July, and monthly crude oil imports fell from record levels in June to their lowest levels since January. As a matter of fact, this rate is not encouraging compared to OPET’s predictions.
