Oil prices firm amid hot producer price reading, demand concerns By Investing.com

Investing.com — Oil prices firmed in morning U.S. trading on Friday as investors gauged a key demand report from the International Energy Agency (IEA) and mixed economic data.

expiring in April had gained 0.2% to $83.00 a barrel, while had climbed by 0.3% to $77.84 per barrel by 09:38 ET (14:38 GMT). 

Crude prices were set for mild weekly gains after clocking volatile swings through the week. 

The U.S. producer price index (PPI) increased 0.3% last month following a revised decline of 0.1% in December, Labor Department figures showed on Friday. Economists had predicted a rise of 0.1%. Following a similarly strong consumer price index reading earlier in the week, the PPI numbers were the latest sign of possibly sticky U.S. inflation, a trend that has all but eradicated bets for imminent interest rate cuts by the Federal Reserve.

The data also dampened hopes the Fed could soon roll out rate reductions following a weak retail sales print on Thursday. 

Meanwhile, the outlook for oil prices still remained dour, especially after an IEA report earlier this week said that global oil demand was slowing. The organization trimmed its 2024 global oil growth forecast to 1.22 million barrels per day (bpd) from 1.24 million bpd. 

The agency also forecast higher supplies in 2024 amid record-high U.S. production and reluctance among members of the Organization of the Petroleum Exporting Countries to enact deeper supply cuts. The IEA expects supply to grow by 1.7 million bpd in 2024, up from its prior outlook of 1.5 million bpd. 

Recession signals from the world’s biggest economies also cast a pall over oil’s demand prospects. Both the and entered a technical recession in the fourth quarter of 2023, GDP data showed on Thursday.

growth was unchanged in the fourth quarter after the bloc also entered a recession in the third quarter. 

The readings factored into concerns that slowing economic growth will pull down oil demand in the coming months. Top importer China is grappling with a sluggish economic rebound as well, although the week-long Lunar New Year holiday is expected to offer some support. 

On the supply front, inventory data released earlier in the week showed a massive jump in U.S. , as production rebounded to record highs, at above 13 million bpd.

Strong U.S. production is expected to largely plug any supply gaps from the OPEC, as well as potential supply disruptions arising from the Middle East.