By Nicole Jao
NEW YORK (Reuters) – Oil prices rose slightly on Friday as geopolitical tensions in the Middle East offset a forecast by the International Energy Agency that warned of slowing demand.
Brent crude futures rose 47 cents to $83.33 a barrel by 12:09 p.m. (1709 GMT). U.S. West Texas Intermediate crude gained 75 cents, or 1%, to $78.78 with the nearby March contract expiring on Tuesday. The April contract rose 51 cents to $78.10.
For the week, Brent is set to gain about 1% and the U.S. benchmark is on track to rise about 2.5%.
The growing risk of a wider conflict in the Middle East supported crude oil prices during the session.
Gaza’s largest functioning hospital was under siege on Friday in Israel’s war with Islamist group Hamas, as warplanes struck Rafah, the last refuge for Palestinians in the enclave, officials said.
On Thursday, Hezbollah said it fired dozens of rockets at a northern Israeli town in a “preliminary response” to the killing of 10 civilians in southern Lebanon, the deadliest day for Lebanese civilians in four months of cross-border hostilities.
“The geopolitical tensions are causing consumer prices to start to rise, not just in the energy complex,” said Tim Snyder, economist at Matador Economics.
U.S. producer prices increased more than expected in January amid strong gains in the costs of services, which could amplify worries that inflation is picking up again.
Crude climbed more than 1% on Thursday as a larger-than-expected drop in U.S. retail sales prompted hopes the Fed will soon start cutting rates, which could be positive for oil demand.
“Hopes for U.S. rate cuts provided support on Thursday, but investors are now adjusting their positions ahead of a long (holiday) weekend in the U.S.,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
Meanwhile, the IEA said on Thursday that global oil demand growth was losing momentum and trimmed its 2024 growth forecast, weighing on prices.
The agency expects global oil demand growth to decelerate to 1.22 million barrels per day (bpd) in 2024, about half of the growth seen last year, in part due to a sharp slowdown in Chinese consumption. It had previously forecast 2024 demand growth of 1.24 million bpd.
The Organization of the Petroleum Exporting Countries (OPEC), meanwhile, expects oil use to keep rising for the next two decades.
(Additional reporting by Natalie Grover in London, Mohi Narayan in New Delhi and Yuka Obayashi in Tokyo; editing by Jonathan Oatis, Kirsten Donovan)
