Beijing: As reported by Reuters, oil prices rose on Friday as a result of upbeat demand predictions from the International Energy Agency and producer group the Organisation of the Petroleum Exporting Countries.
At 14:18 Saudi Arabian time, Brent crude was up 49 cents, or 0.6 percent, at $86.89 a barrel, while US West Texas Intermediate crude futures were up 49 cents, or 0.6 percent, at $83.31.
Since June, both benchmarks have been steadily rising, with West Texas Intermediate crude trading at its highest level this year on Thursday and Brent reaching its highest price since January.
Although the agency anticipates demand growth to slow to 1 million barrels per day in 2024, down 150,000 barrels per day from its previous forecast, the IEA warned on Friday that global inventories could fall sharply over the remaining months of 2023, potentially driving prices even higher.
Tina Teng, a market analyst at CMC Markets in Auckland, stated that even though OPEC+ (Organisation of the Petroleum Exporting Countries and its allies) output cuts and improved demand outlooks remained bullish factors, oil markets may have been overbought following a multi-week rally.
OPEC predicted that global oil demand would increase by 2.25 million barrels per day in 2024 as opposed to 2.44 million bpd in 2023. From the previous month, neither forecast changed.
Oil consumption is anticipated to increase in 2024 due to "solid" economic growth and ongoing progress in China, it was added.
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The US consumer price data for July released on Thursday boosted market sentiment and fueled expectations that the Federal Reserve's aggressive cycle of rate hikes is coming to an end.
Teng stated that "China's sluggish economic data and the retreat on Wall Street weighs on risk sentiment, and a strengthened USD also pressured commodity prices."
Although crude imports increased year over year, according to customs data, China's overall exports fell 14.5% from the previous year, and monthly crude imports fell from nearly record highs in June to the lowest levels since January.
Data released this week also revealed that factory gate prices continued to decline in July and that consumer prices in China entered a state of deflation, raising questions about the demand for fuel in the second-largest economy in the world.
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Prices have been supported by Saudi Arabia and Russia extending their output cuts, as well as supply concerns sparked by the possibility that the conflict between Russia and Ukraine will halt Russian oil shipments to the Black Sea region.
The second half of this year is likely to see a supply deficit for crude, according to Baden Moore, head of commodity and carbon strategy markets at National Australia Bank, but it will be less than OPEC had predicted, which had predicted a deficit of about 2 million barrels per day in the third quarter.
Moore continued, "Although our supply deficit forecast is lower, we expect it to be sufficient to drive prices over $90/bbl through 2H23.