Economy has slowed down on a global scale due to the recent fall in oil price.
“Things are still negative on the economic front, but we are still in a structural shortfall for prompt oil and that means physical buyers will be there to support dips knowing the uncertainty of what lies ahead on the geopolitical front,” said Stephen Innes, managing partner at SPI Asset Management.
Innes said investors had next week’s US Federal Reserve decision on interest rates firmly on their minds.
Federal officials have indicated that the central bank would likely raise rates by 75 basis points at its July 26-27 meeting.
“While 75 is in the cards, guidance will be important and any softening in the rate hike outlook would be great for global growth,” Innes added.
While signs of softening US demand weighed on oil prices and sent benchmark contracts sliding around 3 percent in the previous session, tight global supplies continued to keep the market buoyed.
Supply fears were easing slightly though after Libya resumed production at several oil fields earlier this week.
“Libyan production is recovering, but with clashes in the capital no one knows how long the production recovery will hold,” Giovanni Staunovo, analyst at UBS, said, referring to clashes between rival factions in Libya amid growing concern that a political standoff could prompt renewed conflict.
Staunovo also the market will look to preliminary OPEC production estimates for guidance next week.
WTI has been pummeled over the past two sessions after data showed that US gasoline demand had dropped nearly 8 percent from a year earlier in the midst of the peak summer driving season, hit by record prices at the pump.
In contrast, signs of strong demand in Asia propped up the Brent benchmark, putting it on course for its first weekly gain in six weeks.
Demand in India for gasoline and distillate fuels rose to record highs in June, despite higher prices, with total refined product consumption running at 18 percent more than a year ago and Indian refineries operating near their busiest levels ever, RBC analysts said.
“This signals much more than a strong recovery from COVID-plagued years,” RBC analyst Michael Tran said in a note.