Oil prices are set to achieve their second consecutive week of gains, despite a slight dip on Friday, driven by positive US economic data that has bolstered optimism regarding demand from the world's largest oil consumer. This week, Brent crude futures have increased by approximately 1.3%, while US West Texas Intermediate (WTI) crude futures have seen a rise of about 1.2%.

Friday saw Brent had dropped 22 cents, or 0.3%, to $80.82 per barrel, and WTI had fallen 30 cents, or 0.4%, to $77.86 per barrel. US retail sales data released on Thursday surpassed analysts' expectations, while separate reports showed a decline in new unemployment claims, leading to renewed confidence in US economic growth.

Analysts at FGE consultancy noted that the focus of oil markets is likely to shift back to geopolitical issues, particularly with warnings of possible retaliatory actions by Iran against Israel following the killing of a Hamas leader in Tehran. Negotiations aimed at securing a ceasefire in the Gaza conflict resumed on Thursday, even as Israeli forces continued their operations in the region. These talks, which Hamas is boycotting, are scheduled to continue in Doha on Friday. Meanwhile, China's refineries significantly reduced their crude processing rates last month due to weak fuel demand, which has put a cap on oil prices.

Earlier in the week, the Organization of the Petroleum Exporting Countries (OPEC) lowered its demand forecast for the year, citing weaker-than-expected performance from China. According to ANZ analysts, despite an increase in crude oil inventories last week, gasoline and distillate demand in the US remains strong. However, this strength is not reflected in China, where apparent oil demand dropped by 8% year-on-year in the past month.