Oil Rises Over 3% But Traders Still Daunted By Bullish/Bearish Signals

Meanwhile, a new survey reveals pragmatic sentiment moving forward: File Image/Pixabay

The gains that crude were beginning to make mid week ended on Friday as traders were reportedly confused by bullish demand signals and bearish economic concerns.

However, the commodity was still set for a weekly rise of over 3 percent.

Brent settled down 8 cents to $85.34 per barrel, while West Texas Intermediate settled down 22 cents to $81.04.

The bullish side of the ledger included expectations that supplies are tightening for motor fuels; also, the International Energy Agency predicted  that demand will rise by 1.3 million barrels per day (bpd) this year, up 110,000 bpd from last month; the agency also  cut its 2024 supply forecast, now stating that "Our balance for the year shifts from a surplus to a slight deficit."

On the bearish side, "there are worries the U.S. Federal Reserve won't be able to cut interest rates" because inflation remains above the central bank's target of 2 percent, according to Phil Flynn, senior market analyst at Price Futures Group Inc.

Of Friday's trading activity, John Kilduff, founding partner at Again Capital, said, "We're continuing to tread water."

Daniel Ghali, a commodity strategist at TD Securities, added, "Current price action is more likely tied to speculative positioning than fundamentals."

Meanwhile, a Bloomberg Intelligence oil price survey released Friday showed  that market sentiment moving forward is reasonably even-keeled: 92 percent of those surveyed thought the geopolitical risk premium already baked into crude oil prices is less than $5 per barrel; also, 53 percent think Brent will rise above $80 per barrel at the end of 2024 (only 5 percent see prices exceeding $100).

Salih Yilmaz, senior industry analyst for Bloomberg Intelligence, said, "The turmoil in the Red Sea and the Israel-Hamas conflict has arguably had a limited effect on prices, given there hasn't been any substantial disruption to oil flows, and OPEC+ has a meaningful amount of spare capacity.

"However, the Middle East tensions and the geopolitical risk premium may be slowly starting to become more baked into oil prices; that's after they were outweighed by weak economic prospects and a bleak demand picture in the past few months, as Brent oil price tests $85 a barrel."