Oil prices rebound on demand upgrade, weaker dollar

The news: Oil prices have rebounded further, days after hitting their lowest level in six months, helped by a lift in the International Energy Agency’s (IEA) demand forecast and a weaker dollar.

The numbers: Brent crude futures settled 3.2% higher at USD76.61 ($114.44) a barrel, while US West Texas Intermediate crude climbed 3% to USD71.68 a barrel.

The market has turned around after hitting a nearly six-month low on Wednesday. It was bolstered by an IEA forecast overnight that said world oil consumption will rise by 1.1 million barrels per day (bpd) in 2024, a 130,000 bpd improvement on its previous forecast, due to a better outlook for the US and lower oil prices.

The context: The Organization of the Petroleum Exporting Countries expects demand to be double that. Prices also got support from a weakening of the US dollar after the Federal Reserve signalled lower borrowing costs for 2024 on Wednesday, which could boost economic growth and demand for oil. A weaker dollar also makes oil less expensive for foreign purchasers.