By Shariq Khan
In early Asian trading on Friday, oil prices saw a slight dip, but the market’s benchmarks are poised for a second consecutive weekly gain following positive U.S. economic data that alleviated concerns about a potential recession in the top oil-consuming nation.
Crude oil futures dropped by 0.2% to $80.88 per barrel, while U.S. West Texas Intermediate crude futures fell by 0.3% to $77.93 a barrel.
Despite the slight decline, Brent is set to climb by 1.6% for the week, with WTI also on track for gains of about 1.5%.
Investor sentiment received a boost with the release of encouraging U.S. economic growth data this week.
Recent reports showed a 1% increase in U.S. retail sales last month, surpassing market forecasts of a 0.3% gain. Additionally, data revealed a decrease in new applications for unemployment benefits last week.
“US economic data released this week has helped to temper fears of a sharp slowdown in the US economy,” analysts at energy consultancy FGE stated.
Market focus is now shifting back to fundamentals and geopolitics, with expectations of retaliatory actions from Iran against Israel after the killing of a Hamas leader in Tehran.
Negotiations for a ceasefire in the Gaza war are ongoing, despite Hamas’ boycott of the talks. The discussions will continue in Doha on Friday.
On the demand side, U.S. and Chinese signals have been mixed, with U.S. inventories unexpectedly rising this week and Chinese refineries reducing crude processing rates due to weak fuel demand last month.
OPEC recently revised its demand outlook for this year, citing lower expectations for China.
Analysis:
The slight decrease in oil prices in Asian trading may be temporary, as the market is on track for a second consecutive weekly gain. Positive U.S. economic data has eased fears of a recession, boosting investor confidence. However, geopolitical tensions and demand signals from major economies like the U.S. and China could impact future price movements. It is essential for investors to monitor these factors closely to make informed decisions regarding their investments in the oil market.
