Oil prices increased on Friday, marking a
fourth consecutive week of gains following a
report by the International Energy Agency
(IEA), which stated that global demand for oil
will reach a record high this year, primarily
driven by a recovery in Chinese consumption.
Brent crude futures rose 22 cents, settling at
$86.31 a barrel, while West Texas Intermediate
crude futures gained 36 cents, settling at
$82.52 a barrel. Both contracts experienced
gains of 1.5% and 2.4%, respectively, for the
week, which is the longest such streak since
June 2022.
While the IEA report is optimistic about the
global oil demand growth of 2 million barrels
per day (bpd) to reach 101.9 million bpd, it
warned that the deep output cuts announced
by the Organization of the Petroleum
Exporting Countries (OPEC) and other
producers led by Russia could exacerbate the
oil supply deficit and harm consumers. OPEC
flagged downside risks to summer oil demand,
and its decision to cut output by a further 1.16
million bpd could potentially impact
consumers and hinder global economic
recovery, according to the IEA.
Moreover, the IEA stated that it expected a fall
in global oil supply by 400,000 bpd by the end
of the year due to an expected increase in
production of 1 million bpd from outside of
OPEC+ beginning in March, compared to a 1.4
million bpd decline from the producer bloc.
The U.S. oil and gas rig count also fell for the
third consecutive week, indicating future
supply, according to Baker Hughes data. U.S.
oil rigs declined by two to 588 this week, their
lowest since June 2022, while gas rigs fell by
one to 157.
The U.S. dollar index was trading at roughly
a one-year low, which was due to the U.S.
consumer and producer price data releases
that raised expectations that the Fed was
approaching the end of its rate-hiking cycle.
Despite this, the greenback edged up on
Friday, causing dollar-denominated oil to
become more expensive for investors holding
other currencies, limiting the growth of oil
prices. In conclusion, the oil market remains
buoyed by the narrative of rising demand and
relative supply tightness, according to John
Kilduff, Partner at Again Capital LLC.
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