Brent crude futures dropped 23 cents, or 0.3%, to $78.87 a barrel, and U.S. crude futures WTI slipped 7 cents to $74.01
Oil prices dropped on Friday after rallying the day before, as geopolitical tensions and disruptions in U.S. oil production from a cold blast were countered by concerns over slow demand growth in China and ample supply forecasts.
Brent crude futures dropped 23 cents, or 0.3%, to $78.87 a barrel by 0420 GMT, and U.S. West Texas Intermediate (WTI) crude futures slipped 7 cents to $74.01.
Both benchmarks, which advanced nearly 2% on Thursday as the International Energy Agency (IEA) joined producer group OPEC in forecasting strong growth in global oil demand, are on track to end the week nearly 1-2% higher.
On Thursday, the IEA again uplift its 2024 global oil demand growth forecast, though its projection remains lower than OPEC’s expectations, and said the market looked well supplied because of strong growth outside the producer group.
The IEA expects world oil supply to increase 1.5 million bpd to a new high of 103.5 million bpd in 2024, fuelled by record-setting output from the United States, Brazil, Guyana and Canada.
As tensions in the Middle East are spreading, traders do not want to take short positions, but they are also cautious about continuing to build long positions as China’s economic recovery remains slow, said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
There are also concerns that the U.S.-China conflict could attract attention again as the U.S. election approaches, which would be negative for energy demand, he said.
Unless tensions in the Middle East quickly escalate further, WTI is likely to continue trading in a range around $70-$76, he said.
Two oil tankers that had diverted away from the Red Sea have turned back and passed through the Bab al-Mandab Strait, according to ship-tracking data, though tensions in the region continued to disrupt global shipping and trade.
Tanker traffic through the Bab al-Mandab Strait for Jan 13 – 17 was 58% lower on the same period in 2023, data from consultancy Vortexa indicated.
