Oil prices dipped slightly on Friday but recorded a second consecutive weekly gain on a surprise drop in US crude stocks and signs of improving crude demand.
Brent, the benchmark for two thirds of the world’s oil, traded 0.55 per cent lower to settle at $85.24.
West Texas Intermediate, the gauge that tracks US crude, declined 0.69 per cent to close at $80.73 a barrel.
However, both crude benchmarks finished up about 3 per cent on the week.
“Crude oil … remains supported by positive trend vibes since it stepped into the medium bullish consolidation zone,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The geopolitical tensions, tight Opec supply, the rising summer demand and reflation appetite are among factors that support the rally,” she added.
US crude inventories, an indicator of fuel demand in the world’s largest economy, decreased by 2.5 million barrels in the week that ended on June 14, according to the Energy Information Administration.
Analysts polled by Reuters were expecting a 2.2-million-barrel drop in crude stocks.
Petroleum inventories fell by 2.3 million barrels last week, while distillate stocks decreased by 1.7 million barrels, the EIA data showed.
Brent has gained nearly 6 per cent since the Opec+ meeting on June 3, at which the group decided to extend output cuts of 3.66 million barrels per day until the end of 2025.
They also announced a plan to gradually unwind voluntary output curbs of 2.2 million bpd from October 2024 to September 2025, initially triggering a fall in crude prices.
A few days after the announcement, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman criticised media speculation and market analyses surrounding Opec+ meetings, saying such conduct “fiddled with the market”.
“In all of the cases, they will try to raise expectations about what Opec+ will do. So, when that decision is taken, it would have to be lower than that expectation,” he said during a ministerial panel at the St Petersburg International Economic Forum in Russia earlier this month.
Concerns of higher-for-longer interest rates have limited further oil price gains. High interest rates weigh on economic growth, lowering crude demand.
Earlier this month, the Federal Reserve downgraded its rate-cut expectations for 2024, projecting it would lower US interest rates once this year.
Updated projections from the Fed's June 11-12 meeting showed policymakers expect US rates will be lowered to 5.1 per cent this year.
The Fed previously forecast three rate cuts this year, but stalled progress in taming inflation and a strong labour market have forced officials to scale back their estimations.
In a research note last week, Swiss bank Julius Baer said it expects the Fed to start cutting rates at its September meeting, followed by a further cut in December, and to gradually reduce the policy rate in 2025 with three more cuts.
