Oil prices experienced a modest upswing on Friday, buoyed by the positive outlook presented by the Organisation of the Petroleum Exporting Countries (OPEC) regarding oil demand for the upcoming year, alongside an incremental adjustment in its global economic growth projections.

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The dynamics shaping the oil market continue to be influenced by a multitude of factors, including geopolitical tensions, economic trends, and regional developments. As global markets brace for potential shifts, the recent pronouncements by the OPEC serve as a focal point for understanding the trajectory of oil prices in the coming months.

Matt Orton, Chief Market Strategist at Raymond James Investment, offered his perspective on the oil market dynamics. Orton acknowledged the surprising dip in crude oil prices earlier in the year, attributing it to persistent supply constraints and ongoing geopolitical tensions. Notably, he highlighted the enduring conflict between Russia and Ukraine, a factor that has reverberations throughout global energy markets.

Additionally, Orton underscored the increasing global mobility, even in the context of the pandemic, as a driving force behind sustained oil demand. With people around the world, including in China, resuming travel activities, the demand for oil has shown resilience.

“I think the crude oil prices can continue to drift a little bit higher. I was actually surprised by how low they went earlier this year, given the fact that there have been persistent supply constraints. We have the ongoing war between Russia and Ukraine and people around the world even in China, people are traveling more, so the demand part of the equation hasn't receded either,” he said.

Brent crude, a key benchmark for international oil prices, exhibited a minor rise of 7 cents to settle at $86.47 per barrel at 0017 GMT on Friday. Simultaneously, US West Texas Intermediate (WTI) crude futures displayed a gain of 12 cents, reaching $82.94 per barrel. The modest yet discernible increments reflect the nuanced response of the oil market to the insights shared by OPEC.

On Thursday, the OPEC maintained its stance on oil demand growth for 2024, projecting an increase of 2.25 million barrels per day (bpd). This projection, while slightly lower than the growth observed in 2023 at 2.44 million bpd, underscores the group's conviction in the resilience of oil consumption despite global economic fluctuations. Notably, these forecasts remained consistent with the previous month's outlook.

OPEC's optimistic outlook for oil demand in 2024 hinges on several pivotal factors, including sustained economic growth and the ongoing evolution of global dynamics. The group highlighted the anticipated continuation of "solid" economic expansion, driven by improvements in China—a leading player in the world economy. As economic conditions improve, OPEC envisions a corresponding uptick in oil consumption, reaffirming the interconnectedness of economic development and energy demand.

With input from agencies

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(Edited by : C H Unnikrishnan)