Oil prices climbed on Friday, driven by the International Energy Agency’s predictions of unparalleled global demand and shrinking supplies. This surge marked the seventh consecutive week of price gains, the longest streak since 2022.
Brent crude futures increased by 41 cents, reaching $86.81 a barrel — a 0.5% rise. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures advanced by 37 cents to $83.19, also up by 0.5%. For the week, both indicators registered approximately a 0.5% increase.
The IEA has projected that global oil consumption reached an unprecedented 103 million barrels daily in June and might achieve another high this month.
Simultaneously, reduced production from Saudi Arabia and Russia is anticipated to considerably lower stockpiles throughout 2023, which, according to the IEA, could further elevate oil prices.
On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) maintained its previous forecast, expecting a rise in global oil demand by 2.44 million bpd for the year. OPEC expressed optimism about the oil market’s outlook for the latter half of the year.
This week’s U.S. economic figures enhanced market confidence, leading to beliefs that the Federal Reserve might soon conclude its robust rate increases.
Supply reductions and a brighter economic perspective have boosted confidence among oil investors, observed OANDA analyst Craig Erlam. Yet, he pointed out indications that the momentum might be losing steam after a prolonged surge. On Thursday, Brent reached its peak since January, following WTI’s highest point for the year a day earlier.
The previous instance when Brent witnessed a seven-week continuous rise was during January-February 2022, before Russia’s incursion into Ukraine.
Following an eight-week decline, the count of operational oil rigs in the U.S., a preliminary sign of forthcoming production, remained unchanged at 525 this week, as reported by energy services company Baker Hughes.
This consistent oil rig count suggests that U.S. producers are being methodical about their drilling and exploration activities, noted Eric Freedman, Chief Investment Officer at U.S. Bank Asset Management.
“Even though the oil price continues its ascent, there aren’t as many firms actively searching for oil,” he commented.
Economic figures from China this week presented a mixed picture. While customs records displayed an annual rise in crude imports, China’s total exports dropped by 14.5% in July. Furthermore, the monthly crude imports in July receded from the near-peak numbers in June, marking their lowest since January.
