Oil dips on profit taking after price crosses $85

A view shows the Yan Dun Jiao 1 bulk carrier in the Vostochny container port in the shore of Nakhodka Bay near the port city of Nakhodka, Russia Aug12, 2022. REUTERS/Tatiana Meel/File photo

Oil prices edged lower on Friday but were on track to gain nearly 4 percent for the week as sharp declines in U.S. crude and fuel inventories, drone strikes on Russian refineries and a rise in energy demand forecasts buoyed prices.

Brent crude oil futures for May fell 41 cents, or 0.5 percent , to $85.01 a barrel at 1234 GMT, after crossing $85 a barrel for the first time since November on Thursday. U.S. West Texas Intermediate (WTI) crude for April fell 32 cents, or 0.4 percent, to $80.94.

The International Energy Agency on Thursday raised its view on 2024 oil demand growth for a fourth time since November as Houthi attacks disrupt Red Sea shipping.

READ: IEA sees subdued oil demand growth as economic headwinds remain

World oil demand will rise by 1.3 million bpd in 2024, the IEA said in its latest report, up 110,000 bpd from last month. It forecast a slight supply deficit this year after OPEC+ members extended cuts, from a surplus previously.

Attack on Russian oil refineries

Also supporting oil prices, Ukraine struck Russian oil refineries in a second day of heavy drone attacks on Wednesday, causing a fire at Rosneft’s biggest refinery in one of the most serious attacks against Russia’s energy sector in recent months.

U.S. crude oil stockpiles fell unexpectedly last week as refineries ramped up processing while gasoline inventories slumped as demand rose, the Energy Information Administration (EIA) said on Wednesday.

READ: Oil prices up 3% on US crude stock drop, Russian refinery attacks

On the demand side, China’s central bank is expected to leave a key policy rate unchanged when it rolls over maturing medium-term loans on Friday, a Reuters survey showed.

Lower interest rates cut consumer borrowing costs, which can boost economic growth and demand for oil.

In the United States, some signs of slowing economic activity were unlikely to spur the Federal Reserve to start cutting interest rates before June as other data on Thursday showed a larger-than-expected increase in producer prices last month.