Investing.com — Oil prices settled lower on Friday but had a positive week after big gains earlier this week, amid fading hopes for a ceasefire in Gaza and easing concerns about demand.
At 2:30 PM ET (18:30 GMT), the stock was down 1.3% at $78.26 per barrel, while the stock was down 1.3% at $84.79 barrel.
Oil is heading for weekly gains
Both benchmark contracts are expected to post gains of around 2% this week, boosted by stronger-than-expected headline data from China, the world’s biggest oil importer. Signs of strong domestic demand have raised hopes that oil demand from the Asian giant will pick up.
Chinese oil imports also contributed to the positive overall tone, as although imports fell from the previous month, they were above last year’s levels.
In addition, inventories surprisingly fell last week, and demand for refining and fuel is expected to increase due to higher travel demand during the summer.
“EIA data shows that US commercial crude inventories fell by 1.36 million barrels last week, different from the 500,000 barrels reported by API,” ING analysts said in a note.
“The decline in crude inventories was driven by stronger exports, which increased by 550 kk b/d WoW to 4.47 mb/d, and stronger refinery activity.”
The number of drilling rigs at Baker Hughes is declining
The number of oil rigs in the US fell by three to 496, the lowest since November, and well below the 586 in the same period last year.
Signs of slower drilling activity come just days after the Energy Information Administration lowered the U.S. oil production forecast for this year to 13.20 million barrels per day, down from a previous forecast of 13.21 million barrels per day.
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A ceasefire between Israel and Hamas seems unlikely, tensions are high
Israel has continued its assault on the city of Rafah in southern Gaza, even as Hamas has said the attack has largely undermined ceasefire negotiations.
The attacks continued even as the US said it would suspend arms shipments to Israel over the Rafah attacks.
The Rafah attacks signaled ongoing geopolitical unrest, resulting in a risk premium still alive in crude oil markets as geopolitical unrest in the Middle East could potentially disrupt supplies from the oil-rich region.
OPEC+ to roll over cuts?
Prices were also supported this week by talks from the Organization of the Petroleum Exporting Countries. and allies known as OPEC+ will continue to implement production cuts in an effort to limit global supply.
“OPEC+ members will also feel uncomfortable flirting with $80/bbl, a level that is not far off,” ING said.
“As we have previously mentioned, price weakness increases the likelihood that OPEC+ members will fully push their additional voluntary cuts of 2.2 million per day into the second half of the year, raising the risk that the market will overextend later in 2024. will be tight, assuming there are no downside surprises in the market. demand side.”
(Peter Nurse, Ambar Warrick contributed to this article.)
