Oil prices mixed by the end of last week, with US crude types lagging a bit while Brent was slightly stronger. This shift occurred despite the ongoing disagreement between OPEC and the International Energy Agency (IEA) regarding demand strength over the next few months.
OPEC and its allies, led by Russia in the OPEC+ group, remain optimistic, even though China has imported less oil than a year ago for the past four months.
OPEC forecasts a solid increase in demand for the rest of the year, while the IEA predicts a decrease, attributing it mainly to the weak level of Chinese buying.
West Texas Intermediate (WTI) crude oil was down 2% at US$76.61 per barrel in late Friday afternoon trading, while Brent declined 1.6% to US$79.58 a barrel. WTI lost 0.5% for the week, and a late dip on Friday shifted Brent from a small gain to a tiny gain of just 0.15%.
Weekly US well data showed a decrease of 2 in the number of active oil rigs across America last week, according to services company Baker Hughes.
The number of gas wells rose by one, and miscellaneous rigs dropped by one to five. Overall, 586 rigs were operating in the US last week, down from 642 a year earlier when there were 520 oil rigs, 117 gas rigs, and five miscellaneous rigs in operation.
Earlier this week, the International Energy Agency stated that global oil demand is expected to rise by less than 1 million barrels per day in 2024, while the Organisation of the Petroleum Exporting Countries forecasted a demand growth of 2.11 million barrels per day.
A slowdown in Chinese demand, particularly the drop in July oil refinery output to its lowest level since 2022, has made OPEC’s demand growth forecast seem “too optimistic.” In contrast, the IEA’s estimate appears “more plausible,” according to Saxo Bank in a Friday note.
“With demand in question, crude prices are instead being supported by supply risks due to ongoing Middle East tensions, including the risk of an Iranian attack on Israel, and Russia’s continued war in Ukraine,” Saxo Head of Commodity Strategy Ole Hansen wrote in his weekly note.