Oil dips, but posts weekly gain on solid 2024 demand outlook
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[June 15, 2024] By
Nicole Jao
NEW YORK (Reuters) -Oil futures prices settled slightly lower on Friday
after a survey showed deteriorating U.S. consumer sentiment, but prices
rose 4% for the week as investors weighed forecasts for solid demand for
crude oil and fuel in 2024.
Brent crude futures settled down 13 cents at $82.62 a barrel, while West
Texas Intermediate (WTI) U.S. crude futures were down 17 cents at
$78.54.
Brent and the U.S. benchmark gained nearly 4% over the week, highest
weekly rise in percentage terms since April.
Both benchmarks slipped after a survey showed U.S. consumer sentiment
weakened in June to a seven-month low.
"The data came in way lower than expected," said Bob Yawger, director of
energy futures at Mizuho. "That implies the average consumers don't have
confidence the economic situation is improving."
Losses were limited by forecasts for strong demand.
The U.S. Energy Information Administration (EIA) upgraded its oil demand
growth estimate for 2024 slightly, and the Organization of the Petroleum
Exporting Countries (OPEC) stuck to a forecast for relatively strong
growth of 2.2 million barrels a day (bpd).
The International Energy Agency (IEA) meanwhile cut its demand growth
forecast to under 1 million bpd.
However, all three forecasters predicted a supply deficit at least until
the beginning of winter, Commerzbank analysts highlighted.
Also this week, the U.S. Federal Reserve kept interest rates on hold,
and investors believe rate cuts are unlikely before December.
"In view of the still uncertain economic outlook for the major economic
regions, a further price increase is not to be expected for the time
being," said Commerzbank analyst Barbara Lambrecht.
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A general view of a French oil Esso refinery by night in Fos-sur-Mer,
France, May 13, 2024. REUTERS/Manon Cruz/File Photo
The U.S. active oil rig count, an early indicator of future output,
fell by four to 488 this week to its lowest since January 2022,
energy services firm Baker Hughes said.
Elsewhere, Russia pledged to meet its output obligations under the
OPEC+ pact after saying it exceeded its quota in May.
Prices dipped last week after OPEC and its allies said they would
phase out output cuts starting from October.
"No matter how many times it promises to make up for poor compliance
at a future date, the market just sees more oil and an agreement
that might just possibly unravel," said PVM analyst John Evans.
Market focus is also on Gaza ceasefire talks, which could alleviate
concerns about potential disruption to oil supply from the region.
Money managers raised their net long U.S. crude futures and options
positions in the week to June 11, the U.S. 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; Addititonal
reporting by Katya Golubkova in Tokyo; Editing by David Goodman,
Mark Potter, Jan Harvey, Alexander Smith and David Gregorio)
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