On Friday, oil prices slightly retreated as the market assessed the impact of U.S. interest rates staying higher for longer than expected. However, due to strong forecasts for crude oil and fuel demand, benchmark oil prices are still heading towards their best weekly performance in over two months.
As of 0344 Greenwich Mean Time, Brent crude futures fell by 34 cents to $82.41 per barrel, a decline of 0.4%. U.S. West Texas Intermediate (WTI) crude futures dropped 41 cents to $78.21 per barrel, down 0.5%.
Nevertheless, both Brent and U.S. benchmark oil prices have risen more than 3% this week, marking the best weekly performance since April 5.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast for strong global oil demand growth in 2024, while Goldman Sachs predicted robust U.S. fuel demand this summer.
This helped to reverse losses from the previous week, which were due to an agreement by OPEC and its allies (collectively known as OPEC+) to start lifting production cuts after September.
"Overall, this week can be seen as an effort to recover oil prices," said Tim Waterer, Chief Market Analyst at KCM Trade in Australia.
"I wouldn't be surprised to see oil prices rise from here as the demand outlook continues to improve. Much will depend on the performance of summer demand in the Northern Hemisphere."
Further supporting the market, Russia pledged to meet its production obligations under the OPEC+ agreement, after stating it exceeded its quota in May.
However, the price rally this week has cooled off as the U.S. Federal Reserve kept interest rates unchanged, delaying the start of rate cuts until at least December.
