Oil falls but posts weekly gain on outlook for solid 2024 demand

By Nicole Jao

NEW YORK (Reuters) – Oil futures fell on Friday after a survey showed a deterioration in U.S. consumer sentiment, but prices rose 4 percent on the week as investors weighed forecasts of solid demand for crude and fuel in 2024.

Brent crude futures were down 13 cents at $82.62 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 17 cents at $78.54.

Brent and the U.S. benchmark gained nearly 4 percent for the week, the biggest weekly gain in percentage terms since April.

Both benchmarks fell after a survey showed US consumer sentiment fell to a seven-month low in June.

“The data came in much less than expected,” said Bob Yawger, director of energy futures at Mizuho. “This means that average consumers do not have confidence that the economic situation is improving.”

Losses were limited by forecasts for strong demand.

The US Energy Information Administration (EIA) slightly upgraded its estimate of oil demand growth for 2024, and the Organization of the Petroleum Exporting Countries (OPEC) stuck to a forecast for a relatively strong increase of 2.2 million barrels per day (bpd).

Meanwhile, the International Energy Agency (IEA) cut its demand growth forecast to below 1 million bpd.

However, all three forecasters predicted a supply shortage at least until the beginning of winter, Commerzbank analysts pointed out.

Also this week, the US Federal Reserve kept interest rates on hold, and investors believe rate cuts are unlikely before December.

“Given the still uncertain economic outlook for the major economic regions, no further price increases are expected for the time being,” said Commerzbank analyst Barbara Lambrecht.

The number of active U.S. oil rigs, an early indicator of future production, fell by four to 488 this week, to the lowest level since January 2022, energy services firm Baker Hughes said.

Elsewhere, Russia pledged to meet its production obligations under the OPEC+ pact after it said it exceeded its quota in May.

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Prices fell last week after OPEC and its allies said they would phase out production cuts starting in October.

“No matter how many times he promises to make up for weak compliance at a future date, the market is just seeing more oil and a deal that may fall apart,” said PVM analyst John Evans.

The market’s focus is also on ceasefire talks in Gaza, which could ease concerns about a potential disruption to oil supplies from the region.

Money managers increased their net long positions in US crude oil and options in the week to June 11, the US Commodity Futures Trading Commission (CFTC) said on Friday.

(Reporting by Nicole Jao in New York, Robert Harvey and Natalie Grover in London and Ashitha Shivaprasad in Singapore; Additional reporting by Katya Golubkova in Tokyo; Editing by David Goodman, Mark Potter, Jan Harvey, Alexander Smith and David Gregorio)