Oil prices traded mixed on Friday as sentiment was curbed due to the International Energy Agency’s (IEA) demand forecast following gains in the previous session on the US’s weaker-than-expected retail sales data for January, reinforcing the possibility of interest rate cuts in the coming months.
Brent crude oil futures stumbled 0.02% to $82.84 per barrel, while the US West Texas Intermediate (WTI) crude futures added 0.14% to $78.14 per barrel.
The global and US benchmarks rose more than 1% on Thursday as retail sales in the world’s largest economy dropped 0.8% month-over-month (MoM) in January from the prior reading of a 0.4% increase, marking the largest decline since February.
The slide also exceeded market consensus of a 0.1% fall and fueled the prospect of the Federal Reserve trimming rates soon, which could boost oil demand.
While optimism for US rate cuts drove prices on Thursday, President of Nissan Securities Co. Ltd.’s NS Trading, Hiroyuki Kikukawa, said traders are now tweaking their positions before an extended weekend in the country.
US markets are set to pause activities on February 19 in observance of the President’s Day holiday.
Traders would keep observing whether geopolitical tensions in the Middle East would impact crude supply chains while they monitor interest rate trends, Kikukawa added, expecting WTI to trade between $70 and $80 in the meantime.
Oil Demand Outlook Uncertain, Supply Disruptions Persist
Exerting some pressure on market sentiment was the IEA’s outlook on global oil demand.
On Thursday, the Paris-based energy watchdog stated that crude demand growth worldwide is slowing and provided a revised 2024 projection opposite the Organization of the Petroleum Exporting Countries’ (OPEC) estimate.
IEA said the global oil consumption will likely surge by 1.22 million barrels per day (bpd) this year, a slight drop from December’s projection. The OPEC, on the other hand, left its sharp growth estimate of 2.25 bpd unchanged on Tuesday.
Supply disruptions also persisted as conflict in the Middle East continued, with the fight between Israel and Hezbollah escalating.
The Lebanese militant group on Thursday said it launched dozens of missiles toward northern Israel in retaliation for the Israeli airstrikes on southern Lebanon, which resulted in casualties of 10 civilians and three Hezbollah fighters.
The incident was the most fatal day for Lebanese residents in four months of cross-border conflict.
On the same day, the Israeli Defense Forces (IDF) also conducted a raid on Nasser Hospital, Gaza’s largest functioning hospital, with IDF claiming they had captured dozens of terror suspects during the operation.
