Investing.com -- Helped by forecasts for record world oil demand this month, coming no less from the closely-followed International Energy Agency, crude prices finished with a seventh straight week of gains — the longest winning streak since June 2022.
Yet, the rally is slowing. In the latest week, U.S. crude prices rose by 0.3%, compared with the near 5% rise seen two weeks ago and during the second week of the rally.
New York-traded West Texas Intermediate, or WTI, crude settled up 37 cents, or 0.5%, both for the day and week. It was the smallest weekly advance for WTI since the rally that began in the week to June 16. Notwithstanding the slowing pace of the rally, the U.S. crude benchmark still hit a 9-month high of $84.89 on Thursday and is up about 20% in all in under two months.
London-based Brent crude also rose meagerly for the week. It settled at $86.81 per barrel, up 41 cents, or 0.5%, on the day, and 0.7% higher on the week. Like WTI, the weekly gain for Brent was the smallest since the oil rally which began seven weeks ago. But in a similar trend to its U.S. counterpart, the global crude benchmark touched a new milestone on Thursday, reaching a seven-month high of $88.10. In under two months, Brent is up 18%.
Oil managed to end the day and week higher after early weakness in Friday’s trade that followed through with Thursday’s lower close.
After a seven-week run-up, complacency was setting into the market, enough “sometimes that…you get a decent pullback”, Ed Moya, analyst at online trading platform OANDA, said. He, however, conceded that momentum was still adequate to deliver another week of gains, adding that “energy traders remain overly confident the oil market will remain tight” and that “it doesn’t seem like exhaustion is settling in yet”.
Friday’s higher close came after the Paris-based International Energy Agency estimated that global oil demand hit a record 103 million barrels per day in June and could scale another peak in August.
Even so, the so-called IEA, revised down its forecast for August demand by 150,000 barrels per day from July.
"The global economic outlook remains challenging in the face of soaring interest rates and tighter bank credit, squeezing businesses that are already having to cope with sluggish manufacturing and trade," said the agency, which looks out for the welfare of global oil consumers.
For 2023, the IEA sees a 2.2M-barrel-per-day growth. That is less than the 2.44M-barrels daily growth forecast by the Organization of the Petroleum Exporting Countries.
On a daily basis, demand for this year is forecast to average 102.2M barrels, the IEA said, with China accounting for more than 70% of growth, despite concerns about the economic health of the world's top oil importer.
For 2024, the IEA forecast world demand growth for oil to slow sharply to 1.0M barrels per day, citing lackluster macroeconomic conditions, a post-pandemic recovery running out of steam and the burgeoning use of electric vehicles.
"With the post-pandemic rebound largely completed and as multiple headwinds challenge the OECD's outlook, oil consumption gains slow markedly," the agency added.