Expecting a weekly increase in oil prices for the first time in two months

15 Dec 2023 , 09:38 AM

Early Asian trading on Friday saw oil prices increase, on track to record their first weekly gain in two months thanks to a weaker dollar and an optimistic outlook from the International Energy Agency (IEA) for oil demand in the upcoming year.

Brent futures increased by 9 cents to USD 76.70 per barrel. At USD 71.68, US West Texas Intermediate (WTI) crude increased by 10 cents.

The US Federal Reserve’s midweek announcement that it is expected to lower borrowing costs next year helped put both benchmarks on track for a slight weekly rise.

The US central bank said interest rate hikes have probably come to an end and that lower borrowing costs are on the horizon in 2024, which caused the dollar to drop to a four-month low on Thursday.

For overseas buyers, oil valued in dollars is less expensive when the dollar is depreciated.

On Thursday, the European Central Bank, however, reaffirmed that borrowing costs will continue at record highs despite lower inflation projections, countering wagers on impending interest rate reduction.

The International Energy Agency predicted in a monthly report that global oil consumption will increase by 1.1 million barrels per day (bpd) in 2024, up 130,000 bpd from its previous estimate. The agency attributed this increase to improved US demand prospects and lower oil prices.

The 2024 estimate falls short of the 2.25 million barrels per day (bpd) demand growth projected by the Organisation of the Petroleum Exporting Countries (OPEC).

Recent weeks have seen increased pressure on oil prices due to weak economic data from China, the second-largest oil consumer in the world. The International Energy Agency predicted in a monthly report that global oil consumption will increase by 1.1 million barrels per day (bpd) in 2024, up 130,000 bpd from its previous estimate. The agency attributed this increase to improved US demand prospects and lower oil prices.

The 2024 estimate falls short of the 2.25 million barrels per day (bpd) demand growth projected by the Organisation of the Petroleum Exporting Countries (OPEC).

Recent weeks have seen increased pressure on oil prices due to weak economic data from China, the second-largest oil consumer in the world.

Later on Friday, monthly data on November’s retail sales, industrial production, business investment, unemployment, and housing prices in China will be made public.

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