EBC Markets Briefing | Oil prices on track for weekly gain heading into summer

Oil prices fell on Friday but were on track for their first weekly gain in four weeks as markets assessed the impact of higher-for-longer US interest rates versus solid outlooks for crude and fuel demand this year.

The OPEC stuck to a forecast for relatively strong growth in global oil demand for 2024 after the cartel and its allies agreed to start unwinding their output cuts after September.

Oil prices are expected to jump this summer on demand for transportation and cooling and the production phaseout should put a lid on the prices. Goldman Sachs analysts forecast Brent crude to rise to $86.

Wall Street widely predicts slowing demand amid greater supply will send prices lower next year, with JPMorgan analysts predicting Brent to average $75 in 2025, sharply down from $83 in 2024.

Crude inventories rose by 3.7 million barrels in the week ended June 7, the EIA said, compared with analysts' expectations for a 1 million-barrel draw. The rise was driven largely by a jump in imports.

Oil refining in China is expected to be flat or fall for the first time in data that extends back to 2004 — excluding a Covid-hit 2022 — in a blow to global demand, according to a survey by Bloomberg.

Brent crude has failed to break out of the range between $83 and $81 during the busy week. China PPI contraction eased in May, so the risky looks slightly more skewed towards the upside.

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