Oil up on record demand forecast, 7th straight weekly gain

Oil prices edged higher on Friday after the International Energy Agency forecast record global demand and tightening supplies, propelling prices to the seventh straight week of gains, the longest such streak since 2022.

Brent crude futures rose 41 cents, or 0.5%, to settle $86.81 a barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 37 cents, or 0.5%, to settle at $83.19. On a weekly basis, both benchmarks rose about 0.5%.

The IEA estimated that global oil demand hit a record 103 million barrels per day in June and could scale another peak this month.

Meanwhile, output cuts from Saudi Arabia and Russia set the stage for a sharp decline in inventories over the rest of 2023, which IEA said could drive oil prices even higher.

On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) said it expects global oil demand to rise by 2.44 million bpd this year, unchanged from its previous forecast. Prospects for the oil market look healthy for the second half of the year, OPEC said.

U.S. economic data this week also lifted market sentiment, fueling speculation that the Federal Reserve is nearing the end of aggressive rate hikes.
Supply cuts and an improving economic outlook have created more optimism among oil investors, OANDA analyst Craig Erlam said. However, he noted signs momentum was wearing thin after a sustained rally. On Thursday, Brent hit its highest since January, a day after WTI hit its highest this year. The last time that Brent rose for seven straight weeks was in January-February 2022, prior to Russia’s invasion of Ukraine.

After falling for eight weeks in a row, the number of oil rigs operating in the U.S., an early indicator of future output, held steady at 525 this week, energy services firm Baker Hughes said.

The steady oil rig count indicates U.S. producers are maintaining discipline about drilling and exploration, said Eric Freedman, Chief Investment Officer at U.S. Bank Asset Management.

“The oil price keeps going higher but not as many companies are out looking for oil,” he said.

Mixed economic data from China weighed on sentiment this week. While customs data showed crude imports up year on year, China’s overall exports plunged 14.5% in July, with monthly crude imports retreating from June’s near-record highs to their lowest level since January.