Market Analysis

Oil prices were poised for a second consecutive week of gains despite a slight dip on Friday. Recent U.S. economic data bolstered optimism about demand in the world's largest oil consumer.

Brent crude futures were on track for a 1.3% weekly increase, while U.S. West Texas Intermediate (WTI) crude futures had risen approximately 1.2%. On Friday, Brent crude fell by 30 cents, or 0.4%, to $80.74 per barrel by 0528 GMT, and WTI decreased by 40 cents, or 0.5%, to $77.76.

U.S. retail sales data released on Thursday exceeded analysts' expectations, and separate data indicated a drop in new unemployment benefit claims, fueling renewed optimism about U.S. economic growth.

According to analysts at ANZ Research, "Crude oil rebounded from recent losses as positive economic data and supply-side concerns improved investor sentiment."

Consultancy FGE noted that oil markets would now shift their focus to geopolitical developments, following warnings of potential retaliatory actions from Iran against Israel in response to the killing of a Hamas leader in Tehran.

New ceasefire negotiations began on Thursday in Doha, Qatar, to address the ongoing Gaza conflict, even as Israeli forces continued their offensive in the Palestinian enclave. Hamas has boycotted the talks, which have been extended and will resume in the Qatari capital.

On the other hand, Chinese refineries significantly reduced crude processing rates last month due to weak fuel demand. The Organization of the Petroleum Exporting Countries (OPEC) revised its demand forecast downward for the year, citing weaker expectations for China.

ANZ analysts observed, "Despite a rise in crude oil inventories last week, gasoline and distillate demand remains robust. However, this is not the case in China, where apparent oil demand dropped 8% year-on-year in July."