By Ambar Warrick
Investing.com– Oil prices were muted on Friday, but were headed for strong weekly gains on the back of easing inflation risks, a strong demand forecast, and the prospect of OPEC supply cuts.
London-traded rose 0.1% in early Asia trade to $99.38 a barrel, while U.S. fell 0.3% to $94.08 a barrel, as of 20:33 ET (00:33 GMT). Both contracts had surged over 2% on Thursday, and were set to end the week between 4% to 5% higher.
Oil’s biggest boost this week was data on Wednesday that showed U.S. grew less than expected in July, pointing to a smaller rate hike by the. This weighed on the and benefited commodity prices.
But oil extended its rally on Thursday after the International Energy Agency (IEA) said soaring prices could push consumers into oil for heating purposes, shoring up demand.
The IEA raised its outlook for 2022 oil demand by 380,000 barrels per day (bpd), to 2.1 million bpd. 2022 oil demand is expected at 99.7 million bpd.
In contrast, the Organization of Petroleum Exporting Countries (OPEC) cut its annual demand growth outlook by 260,000 bpd to 3.1 million bpd- although its expectations for demand still remained higher than that seen by the IEA.
But a lower demand outlook for the OPEC also opens the door to potential supply cuts, a move that is a net positive for oil prices.
Demand concerns- particularly in the face of falling factory activity across the globe- had pummeled crude prices last week, pushing them to lows last seen in February. But a reversal in this trend, especially as inflationary pressures ease, could spur a resurgence in crude demand.
But other indicators show that this trend may be far away. U.S. crude stockpiles rose unexpectedly for two consecutive weeks, pointing to sluggish demand on the ground.
U.S. gasoline prices have also eased from record highs hit in mid-June, while demand among crude refiners has also dipped.