July 25, 2024
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Oil Prices Set to End the Week at 4% Gain

Oil prices experienced a slight decline on Friday, yet remained poised for nearly a 4% weekly gain, fueled by positive factors such as the International Energy Agency’s (IEA) upward revision of its 2024 oil demand forecasts and an unexpected drop in U.S. stockpiles.

Brent crude oil futures dipped by 38 cents or 0.4% to $85.04 a barrel, following a recent surge that saw prices surpass $85 for the first time since November on Thursday.

U.S. West Texas Intermediate (WTI) crude fell by 35 cents or 0.4% to $80.91 per barrel.

The IEA’s latest report, released on Thursday, raised its projection for 2024 oil demand by 1.3 million barrels per day (bpd), attributing the increase to disruptions in Red Sea shipping caused by Houthi attacks.

This marks the fourth consecutive upward revision since November.

Additionally, ANZ analysts highlighted expectations of increased utilization of U.S. oil refineries, with facilities coming back online after capacity shutdowns in January due to winter conditions.

European refinery margins are also on the rise, indicating a “tightening market balance.”

Despite a strengthening U.S. dollar, which typically makes crude more expensive for buyers using other currencies, oil prices were buoyed this week by Ukrainian strikes on Russian oil refineries.

These strikes led to a fire at Rosneft’s largest refinery, representing a significant blow to Russia’s energy sector.

Furthermore, unexpected declines in U.S. crude oil stockpiles and a rise in demand for gasoline contributed to the positive sentiment. Lower interest rates, should they materialize due to expected Federal Reserve cuts, could further stimulate economic growth and oil demand.

However, concerns about slowing economic activity in the United States, coupled with data showing a higher-than-expected increase in producer prices last month, tempered some of the optimism. As a result, expectations for Federal Reserve interest rate cuts before June remain uncertain.

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