Oil Notches Weekly Gains On Bullish Signs But Dips Friday As Gaza Hopes Rekindle

Much of the sentiment hinges on OPEC's ability to maintain its cuts: File Image/Pixabay

Despite oil's chronic range bound status amid mixed messages about the economy and demand, the commodity on Friday was on track to log more weekly gains as traders digested several bullish developments.

However, as of 13:24 EDT, two key benchmarks were down due to sentiment that a Gaza ceasefire may be coming to fruition after all.

Brent was down 41 cents to $87.02 per barrel, while West Texas Intermediate dipped 26 cents to $83.62; WTI was on pace for a weekly advance of over 3 percent, while Brent was ahead by 1.4 percent.

Tim Snyder, economist at Matador economics said in a note, "The last couple of days represent the peak of the drive season, in terms of demand and prices continue to creep higher; this is coming from stronger consumer demand and the effects of Hurricane Beryl."

However, the potential for Beryl to wreak havoc had diminished since it was first feared earlier this week it could wreck infrastructure in the U.S.; then, when the storm diminished in strength, analysts worried it would cause chaos in Mexico; as of Friday, chances of that happening seemed remote.

Also, following reports from the Energy Information Administration that gasoline consumption on a four-week basis rose in the U.S. for the first time in a year, Rob Thummel, a portfolio manager at Tortoise Capital Advisors, said, "Maybe it's a little delayed, but we're going to see the growth; it just might be gasoline's time to shine for the next month or so."

Bloomberg added, "Crude has climbed about 14 percent since early June, partly due to a positive outlook for demand over the Northern Hemisphere summer, with bullish, backwardated timespreads indicating healthy near-term consumption."

More bullish inspiration was provided on Friday by UBS, which forecasted that global oil demand will grow by 1.5 million barrels per day (bpd) this year, above the long-term growth rate of 1.2 million bpd; UBS also predicted bigger inventory declines in the coming weeks if the Organization of the Petroleum Exporting Countries can reign in its members and maintain its vowed production cuts through September.

Giovanni Staunovo, commodity analyst at UBS, told clients in a note, "As such, we still believe Brent will likely reach the USD $90 mark this quarter."

In other oil news on Friday, Iraq's state-run North Oil Company (NOC) reportedly boosted its crude oil production from the Kirkuk governorate to above 360,000 bpd, according to a company source; NOC is also looking to further raise oil production in Kirkuk to 400,000 bpd by the end of 2024.

The source told Shafaq News Agency, "This increase is expected following the development and rehabilitation of several oil wells in NOC-affiliated fields by the Iraqi Drilling Company."