By Shariq Khan
In early Asian trading on Friday, oil prices saw a slight decline, but the market's benchmarks are poised for a second consecutive weekly gain thanks to positive U.S. economic data that has alleviated concerns of a potential recession in the top oil-consuming nation.
Crude oil futures dropped by 0.2% to $80.88 per barrel for Brent, and by 0.3% to $77.93 per barrel for U.S. West Texas Intermediate.
Brent is expected to see a weekly gain of 1.6%, while WTI is on track for an increase of about 1.5%.
Investors have regained optimism regarding U.S. economic growth following a series of data releases this week.
Positive reports on U.S. retail sales and a decrease in new applications for unemployment benefits have helped soothe worries about a sharp slowdown in the U.S. economy.
Market focus is now shifting back to fundamentals and geopolitics, with anticipation of retaliatory actions from Iran against Israel after the killing of a Hamas leader in Tehran.
While demand signals from the U.S. and China have been somewhat shaky, with U.S. inventories showing a surprise increase and Chinese refineries reducing crude processing rates due to tepid fuel demand, the overall outlook remains positive.
The Organization of the Petroleum Exporting Countries (OPEC) recently adjusted its demand forecast for this year, citing softer expectations for China.
Analysis:
The recent uptick in oil prices, driven by positive U.S. economic data and geopolitical tensions, indicates a potentially stable market with modest gains in the near future. While uncertainty remains due to demand signals from major players like the U.S. and China, overall market sentiment seems to be leaning towards a more optimistic outlook. Investors should keep a close eye on developments in the U.S. economy, geopolitical events, and OPEC's decisions to make informed decisions regarding their investments in the oil market.