LONDON: Oil prices edged higher on Friday after declining earlier in the session, but a weaker market outlook from OPEC and the International Energy Agency capped gains.
Brent crude was up 29 cents, or 0.5 percent, at $61.43 a barrel, having dropped to a session low of $60.35. US oil was up 14 cents, or 0.2 percent, at $58.38 after falling to a session low of $57.41. Both contracts are on course for weekly gains.
Prices have risen over recent weeks partly owing to oil production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and other producers in the group known as OPEC+.
Hopes that vaccine rollouts to combat the coronavirus will spur a demand recovery also gave oil prices a lift.
This week however OPEC said it expects global oil demand to recover more slowly than thought in 2021, trimming its forecast by 110,000 barrels per day (bpd) to 5.79 million bpd.
The International Energy Agency (IEA) said that oil supply was still outstripping global demand, though COVID-19 vaccines are expected to support a demand recovery.
“The (IEA) report paints a more pessimistic picture than market participants have presumably been envisaging given the current high prices,” Commerzbank said.
Demand data from the world’s biggest oil importer also paints a bleak picture.
The number of people who traveled in China ahead of Lunar New Year holidays plummeted by 70 percent from two years ago as coronavirus restrictions curbed the world’s largest annual domestic migration, official data showed.
ABN Amro revised its 2021 Brent oil prices forecast slightly higher to $55 a barrel but warned of demand headwinds.
“The biggest recovery in demand will have to come from the aviation sector,” the bank said. “Especially for aviation, we do not yet see a major recovery this year.”