Concern of fewer U.S. rate cuts weighs
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IEA cuts 2024 demand growth view
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US drillers cut oil and gas rigs for fourth week in a row
NEW YORK, April 12 (Reuters) - Oil rose around 1% on Friday, but was set for a small weekly loss, as geopolitical tensions in the Middle East outweighed a bearish world oil demand growth forecast from the International Energy Agency (IEA) and reduced expectations for U.S. interest rate cuts this year.
Brent crude futures were up 94 cents, or 1.1%, at $90.68 a barrel by 1:40 p.m. EDT (1740 GMT), while U.S. West Texas Intermediate crude futures rose 96 cents, or 1.1%, to $85.98.
For the week, Brent was set to fall around 0.5%, while WTI was on track to close 1% lower.
Concern that Iran, the third-largest OPEC producer, might retaliate for a suspected Israeli warplane attack on Iran's embassy in Damascus on Monday has pushed oil prices to near a six-month high this week.
"The market's main focus is on whether Iran will retaliate against Israel," said Andrew Lipow, president of Lipow Oil Associates, with the fear of supply disruption associated with the events in the Middle East supporting prices.
The U.S. expects an attack by Iran against Israel but one that would not be big enough to draw Washington into war, according to a U.S. official. Iranian sources said that Tehran has signalled a response aimed at avoiding major escalation.
Supply chain issues continue to carry the biggest risk premium as Iran maintains its threat to shut the Suez Canal, said Tim Snyder, economist at Matador Economics.
The International Energy Agency cut its forecast for 2024 world oil demand growth to 1.2 million barrels per day (bpd), offsetting earlier price gains from supply concerns.
OPEC on Thursday said world oil demand will rise by 2.25 million barrels per day (bpd) in 2024.
"For now the market is mostly in the OPEC 2.2 million bpd demand growth camp as opposed to the IEA's reduced 1.2 million bpd forecast," said Saxo Bank's Ole Hansen.
Friday's gains erased the losses from the previous session, which was dominated by stubborn U.S. inflation that dampened hopes for an interest rate cut as early as June.
Higher interest rates increase the cost of buying goods and services, which can weaken economic growth and depress oil demand.
U.S. energy firms this week cut the number of oil rigs operating for a fourth week in a row, energy services firm Baker Hughes said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, fell by three to 617 in the week to April 12, the lowest since November. (Additional reporting by Alex Lawler and Robert Harvey in London, Katya Golubkova in Tokyo and Jeslyn Lerh in Singapore; editing by Barbara Lewis, Jason Neely, Josie Kao and Leslie Adler)