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Brent crude futures were down 81 cents, nearly 1%, at $82.05 a
barrel at 1155 GMT.
U.S. West Texas Intermediate crude futures fell 68 cents, also
roughly 1%, to $77.35 in muted trade with the contract set to
expire on Tuesday. The more active April contract slipped 74
cents, also about 1%, to $76.85.
On Thursday, the IEA said global oil demand growth was losing
momentum and cut its 2024 growth forecast slightly, in contrast
to the view held by the Organization of the Petroleum Exporting
Countries (OPEC).
"There was a tentative attempt to recover yesterday morning, but
hopes were shattered after the IEA published its updated
supply-demand outlook," said Tamas Varga of oil broker PVM.
Both contracts climbed over 1% on Thursday as a
larger-than-expected drop in U.S. retail sales prompted hopes
the Federal Reserve will soon start cutting interest rates,
which could be positive for oil demand.
A producer inflation report expected later on Friday should also
help inform the fate of U.S. interest rates.
"Hopes for U.S. rate cuts provided support on Thursday, but
investors are now adjusting their positions ahead of a long
weekend in the U.S.," said Hiroyuki Kikukawa, president of NS
Trading, a unit of Nissan Securities.
Meanwhile, Middle East tensions persist, with the growing risk
of a wider conflict in the region supporting prices.
Gaza's largest functioning hospital was under siege on Friday in
Israel's war with Islamist group Hamas, as warplanes struck
Rafah, the last refuge for Palestinians in the enclave,
officials said.
On Thursday, Hezbollah said it fired dozens of rockets at a
northern Israeli town in a "preliminary response" to the killing
of 10 civilians in southern Lebanon, the deadliest day for
Lebanese civilians in four months of cross-border hostilities.
"I would expect the latest gains from an increased Mideast risk
premium to stick, especially going into the weekend," said
Vandana Hari, founder of oil markets analysis provider Vanda
Insights.
(Additional reporting by Natalie Grover in London, Mohi Narayan
in New Delhi and Yuka Obayashi in Tokyo; Editing by Susan Fenton
and David Evans)
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