Oil prices are set for another weekly gain after clocking volatile swings throughout the week. Higher-than-expected US inflation data have capped this week’s pricing upside as tensions in the Middle East continue to remain intensified amidst several failed mediation attempts to bring about a ceasefire in the Israel-Palestine conflict.

Whilst any price increase is unwelcome, the short-term outlook for oil prices remains somewhat downbeat, especially after an IEA report on Thursday which said that global oil demand was slowing. The organisation 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 Organisation of Petroleum Exporting Countries to enact deeper supply cuts.

Recession signals from the world’s biggest economies also caused markets some concern for global oil demand this year. Both the UK and Japan entered a technical recession in the fourth quarter of 2023, GDP data showed on Thursday. Eurozone GDP 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 also grappling with a sluggish economic rebound, 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. crude stockpiles, 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.

Fuel card users can expect a further increase in prices for next week in the region 3 pence per litre depending on card type.

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