By Barani Krishnan
Investing.com - Oil prices were set to end the week little changed as concerns about global supplies and a possible Russian invasion of Ukraine soon overcame prior losses triggered by worries of excessive U.S. rate hikes to deal with inflation.
The Paris-based International Energy Agency, in a monthly report on Friday, lifted its forecast for this year’s global oil demand by 800,000 barrels a day to 3.2 million barrels.
What’s more, it estimated there could be a billion barrels shortfall by the end of last year between what the Organization of the Petroleum Exporting Countries and its allies — known as OPEC+ — were supposed to have pumped versus actual deliveries to the market since the start of 2021.
“The oil market is incredibly tight,” Toril Bosoni, head of the IEA’s markets and industry division, said in a Bloomberg television interview on Friday. “Prices continue to surge and are now reaching levels that are uncomfortable for consumers across the world.”
The IEA warning lit a fuse under oil prices that had lost more than 3% earlier in the week, first on concerns that Iranian oil supplies could legitimately return to the market through a Tehran-West nuclear deal and fears that the Federal Reserve could impose rate hikes as much as 0.5% a month successively over several months this year to curb U.S. inflation.
Adding to the oil's climb were heightened fears of an imminent Russia-Ukraine war. Multiple sources familiar with the matter told CNN on Friday that the United States and its allies had new intelligence that suggested Moscow could launch an attack on Ukraine even before the end of the Olympic Games. Russia is a major oil producer within OPEC+ and faces stringent U.S. sanctions on its economy in the event of an invasion.
New York-traded West Texas Intermediate was up $2.12, or 2.4%, at $92 per barrel by 1:15 PM ET (18:15 GMT). For the week, WTI was down just 31 cents, or 0.3%, marking the first weekly pause in an oil rally that was interrupted for seven weeks.
London-traded Brent, the global benchmark for oil, was up $1.87, or 2.1%, at $93.28 per barrel. For the week, Brent was basically flat, having settled the previous week at $93.27 after a seven-week rally as well, like WTI.
Year-to-date, WTI is up 22% while Brent has risen about 20%.