Oil prices dipped slightly on Friday but remained on course for a nearly 4% increase for the week.

The drop came despite sharp declines in US crude and fuel inventories, drone strikes on Russian refineries, and a surge in energy demand forecasts.

Brent crude oil futures for May slipped by 0.5% to $85.01 a barrel, while US West Texas Intermediate (WTI) crude for April fell 0.4% to $80.94.

The International Energy Agency (IEA) lifted its outlook on 2024 oil demand growth, citing Houthi attacks disrupting Red Sea shipping. It predicted a 1.3 million bpd rise in world oil demand for 2024, up 110,000 bpd from last month.

US crude oil inventories fell unexpectedly last week, with gasoline inventories also dropping as demand surged, according to the Energy Information Administration (EIA).

Ukraine’s drone strikes on Russian oil refineries, causing a fire at Rosneft’s largest refinery, added to the upward pressure on oil prices.

China’s central bank is anticipated to maintain a key policy rate unchanged, potentially affecting consumer borrowing costs and subsequently oil demand.

Despite some signs of economic slowdown in the United States, the Federal Reserve is unlikely to consider interest rate cuts before June, particularly after a larger-than-expected increase in producer prices last month.