Oil prices experienced a slight dip on Friday, yet managed to record a weekly gain, as tensions in the Middle East and disruptions to oil output counterbalanced concerns about the Chinese and global economies.
Brent futures, the international benchmark for oil prices, settled 54 cents lower at $78.56 a barrel. Meanwhile, U.S. West Texas Intermediate crude fell by 67 cents to $73.41. Despite the daily losses, both benchmarks recorded gains for the week, with Brent up about 0.5% and the U.S. benchmark rising over 1%.
Concerns over China’s economic growth drove the dip in oil prices on Friday. The country’s slower-than-expected economic growth in the fourth quarter has raised doubts about forecasts that demand there will drive global oil growth in 2024.
However, geopolitical risks in the Middle East supported prices for the week. Tensions escalated in Gaza on Friday as Israeli forces pushed south against Hamas militants. Although the conflict in the Middle East has not shut down any oil production, supply outages continued in Libya.
In the U.S., about 30% of oil output in North Dakota, the country’s third-largest producing state, remained shut due to extreme cold. Output had been cut by some 700,000 barrels per day (bpd), or more than half, midweek. It could take a month for production to return to normal levels.
“The International Energy Agency (IEA) this week raised its 2024 global demand forecast, but its projection is half that of producer group OPEC,” said a representative from the IEA. “The Paris-based agency also said that – barring significant disruptions to flows – the market looked reasonably well supplied in 2024.”
“While the oil market continues to be influenced by various factors, it’s clear that geopolitical tensions and supply disruptions are currently playing a significant role in price movements,” said an industry analyst. “As we move forward into 2024, the market will be closely watching developments in China and the Middle East, as well as production levels in the U.S.”
The fluctuating oil prices serve as a reminder of the interconnectedness of global economies and the delicate balance of supply and demand. As the world continues to grapple with these challenges, the resilience and adaptability of the oil market will be put to the test.
