Oil prices rose on Friday, on track to notch their first weekly rise in two months after benefiting from a bullish forecast from the International Energy Agency (IEA) on oil demand for next year and a weaker dollar.
Brent futures rose 51 cents, or 0.7%, to $77.12 a barrel at 1326 GMT. U.S. West Texas Intermediate (WTI) crude climbed 52 cents, or 0.7%, to $72.10.
Both benchmarks were on course for a modest weekly gain, having been lifted by a mid-week announcement from the U.S. Federal Reserve that it could cut borrowing costs next year.
The dollar fell to a four-month low on Thursday after the U.S. central bank indicated interest rate hikes have likely ended and lower borrowing costs are coming in 2024. The dollar index was broadly steady on Friday.
A weaker dollar makes dollar-denominated oil cheaper for foreign purchasers.
World oil consumption will rise by 1.1 million barrels per day (bpd) in 2024, the IEA said in a monthly report, up 130,000 bpd from its previous forecast, citing an improvement in the outlook for U.S. demand and lower oil prices.
The 2024 estimate is less than half of the Organization of the Petroleum Exporting Countries’ (OPEC) demand growth forecast of 2.25 million bpd.
"OPEC+ production cuts are likely to keep the oil market in balance at the start of 2024 despite weaker demand, which should allay current oversupply concerns," Commerzbank said.
OPEC+, which groups OPEC and allies led by Russia, in late November agreed voluntary cuts of about 2.2 million bpd lasting throughout the first quarter.
Weak economic data from Germany, Europe’s biggest economy, and China, the world’s biggest oil importer, weighed on prices.
The HCOB German Flash Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, fell for the sixth consecutive month, declining to 46.7 in December from November’s 47.8, below the 48.2 forecast by economists.
Data released by China’s statistics bureau on Friday showed refinery runs in November dropped to their lowest level since the start of 2023, as margin pressure on non-state-owned refiners saw them cut back production, while sluggish diesel consumption weighed on national fuel demand.
Despite ongoing woes in China’s property market, the data also showed a better-than-expected performance in industrial output and improving retail sales, lending some relief to market sentiment amid the country’s anaemic post-COVID economic recovery.
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