Oil prices increased in the Asian markets on Friday, signalling an end to a seven-week losing streak. Investors are showing positive sentiment regarding potential rate cuts by the Federal Reserve after talks between the Bank of England and European Central Banks on Thursday, 14th December, backed by favourable outlooks from the International Energy Agency (IEA), which have contributed to the upward trend.
Oil prices end seven-week losing strike and head for positive outlook
Traders also positioned themselves for improved demand in 2024, anticipating lower interest rates and a strengthened US economy, thus impacting global markets. The IEA supported this notion by slightly revising its oil demand forecast for 2024 this week, although it remained below the projections made by the Organization of the Petroleum Exporting Countries and Allies (OPEC+), which may negatively impact sentiment.
Despite a positive demand outlook for 2024, oil markets are expected to remain well-supplied, partially due to underwhelming production cuts from the OPEC+ group. This factor had exerted downward pressure on oil prices in recent weeks, pushing them to over five-month lows.
Recent data indicates that total US output remains close to record highs, even though US inventories experienced a larger-than-expected decrease. However, fuel demand in the country remained subdued, with gasoline inventories seeing a mild increase.
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Brent oil futures expiring in February rose 0.3% to $76.84 a barrel, while West Texas Intermediate crude futures increased by 0.3% to $72.14 a barrel. These positive signals from the Federal Reserve set the stage for Brent and WTI futures to record their first positive week in eight, with Brent rising by 1.6% and WTI gaining 0.7%.
