Oil prices set to end week about 4% higher

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 Aug 12, 2022. REUTERS/Tatiana Meel/File Photo

Oil prices edged lower on Friday but were on track to gain nearly 4 percent for the week, boosted by the International Energy Agency revising its 2024 oil demand forecasts higher and an unexpected decline in U.S. stockpiles.

Brent crude oil futures fell 38 cents or 0.4 percent to $85.04 a barrel at 0751 GMT, after crossing $85 a barrel for the first time since November on Thursday. U.S. West Texas Intermediate (WTI) crude fell 35 cents or 0.4 percent to $80.91.

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

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.

READ: Oil dips on profit taking after price crosses $85

ANZ analysts also noted that U.S. oil refinery utilization is expected to pick up. “Refineries are coming online after shutting capacity in January due to winter freeze,” they wrote in a report on Friday.

“European refinery margins are picking up as well,” they said, adding that there were signs of “tightening market balance.”

The gains this week have come despite the U.S. dollar strengthening at its fastest pace in eight weeks. A stronger dollar makes crude more expensive for users of other currencies.

Attacks on Russian refineries

Also supporting oil prices this week were Ukrainian strikes on Russian oil refineries, which caused 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 also fell unexpectedly last week as refineries ramped up processing while gasoline inventories slumped as demand rose, the Energy Information Administration said on Wednesday.

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

On the demand side, China’s central bank left a key policy rate unchanged, as authorities continued to prioritise currency stability amid uncertainty over the timing of expected Federal Reserve interest rate cuts.

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 seen as 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.