Oil steadies as weaker IEA demand outlook offsets rate cut hopes
On Thursday, the IEA said global oil demand growth was losing momentum and trimmed its 2024 growth forecast, in contrast to the view held by the Organization of the Petroleum Exporting Countries (OPEC).
Brent crude futures were down 17 cents, or 0.2%, at $82.69 a barrel at 1500 GMT. U.S. West Texas Intermediate crude futures rose 59 cents, or 0.8%, to $78.62 with the nearby March contract expiring on Tuesday. The April contract rose 20 cents, or 0.3%, to $77.79.
“There was a tentative attempt to recover yesterday morning, but hopes were shattered after the IEA published its updated supply-demand outlook,” said Tamas Varga of oil broker PVM.
Crude climbed over 1% on Thursday as a larger-than-expected drop in U.S. retail sales prompted hopes the Fed will soon start cutting rates, which could be positive for oil demand.
But U.S. producer prices increased more than expected in January amid strong gains in the costs of services, which could amplify worries that inflation was picking up. “Hopes for U.S. rate cuts provided support on Thursday, but investors are now adjusting their positions ahead of a long (holiday) weekend in the U.S.,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities. Meanwhile, Middle East tensions persist, with the growing risk of a wider conflict in the region supporting prices.
Gaza’s largest functioning hospital was under siege on Friday in Israel’s war with Islamist group Hamas, as warplanes struck Rafah, the last refuge for Palestinians in the enclave, officials said.
On Thursday, Hezbollah said it fired dozens of rockets at a northern Israeli town in a “preliminary response” to the killing of 10 civilians in southern Lebanon, the deadliest day for Lebanese civilians in four months of cross-border hostilities.
“I would expect the latest gains from an increased Mideast risk premium to stick, especially going into the weekend,” said Vandana Hari, founder of oil markets analysis provider Vanda Insights.
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