Oil Updates – crude on track for first weekly rise in two months

Oil prices rose on Friday, on track to notch their first weekly rise in two months after benefiting from a bullish forecast from the International Energy Agency on oil demand for next year and a weaker dollar, according to Reuters.

Brent futures rose 21 cents to $76.82 a barrel. US West Texas Intermediate crude climbed 20 cents to $71.78.

Both benchmarks are on course for a modest weekly gain, having been lifted by a mid-week announcement from the US Federal Reserve that it is likely to cut borrowing costs next year.

“Oil prices may see a bit of a ‘demand pull’ due to improved liquidity conditions after the Fed’s dovish pivot,” said Kelvin Wong, an analyst at OANDA in Singapore.

The dollar fell to a four-month low on Thursday after the US central bank indicated interest rate hikes have likely ended and lower borrowing costs are coming in 2024.

A weak dollar makes dollar-denominated oil cheaper for foreign purchasers.

The European Central Bank, meanwhile, pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations.

World oil consumption will rise by 1.1 million barrels per day in 2024, the IEA said in a monthly report, up 130,000 bpd from its previous forecast, citing an improvement in the outlook for US demand and lower oil prices.

The 2024 estimate is less than half of the Organization of the Petroleum Exporting Countries’ demand growth forecast of 2.25 million bpd.

Weak economic data from China, the world’s second-largest oil consumer, has added pressure on oil prices in recent weeks.

Data released by the country’s statistics bureau on Friday showed refinery runs in November dropped to their lowest level since the start of 2023, as margin pressure on non-state owned refiners saw them cut back production, while sluggish diesel consumption weighed on national fuel demand.

Despite ongoing woes in China’s property market, the data also showed a better-than-expected performance in industrial output and improving retail sales, lending some relief to market sentiment amid the country’s anaemic post-COVID economic recovery.