https://arab.news/y89qy
BEIJING: Oil prices gained ground on Friday amid optimistic demand forecasts from the Organization of the Petroleum Exporting Countries producer group and the International Energy Agency, according to Reuters.
Brent crude was up 49 cents, or 0.6 percent, at $86.89 a barrel at 14:18 p.m. Saudi time, while US West Texas Intermediate crude futures were up 49 cents, or 0.6 percent, at $83.31.
Both benchmarks have been on a sustained rally since June, with West Texas Intermediate crude trading on Thursday at its highest this year and Brent hitting its best price since January.
The IEA on Friday warned that global inventories could fall sharply over the rest of 2023, potentially driving prices even higher, though the agency expects demand growth to slow to 1 million barrels per day in 2024, down 150,000 bpd from its previous forecast.
“Oil markets may have been overbought from a multi-week rally, though OPEC+ (Organization of the Petroleum Exporting Countries and its allies) output cuts and improved demand outlooks remained bullish factors,” said Tina Teng, a market analyst at CMC Markets in Auckland.
OPEC said on Thursday it expects world oil demand to rise by 2.25 million barrels per day in 2024, compared with growth of 2.44 million bpd in 2023. Both forecasts were unchanged from last month.
In 2024, “solid” economic growth amid continued improvements in China is expected to boost oil consumption, it added.
Market sentiment was also lifted by Thursday’s US consumer prices data for July, which fueled speculation the Federal Reserve is nearing the end of its aggressive rate hike cycle.
Teng noted: “China’s sluggish economic data and the retreat on Wall Street weighs on risk sentiment, and a strengthened USD also pressured commodity prices.”
While customs data showed crude imports up year-on-year, China’s overall exports plunged 14.5 percent on last year, with monthly crude imports retreating from June’s near-record highs to the lowest levels since January.
Data this week also showed China’s consumer prices fell into deflation and factory gate prices extended declines in July, raising concerns about fuel demand in the world’s second-largest economy.
On the supply side, prices have been supported by extensions to output cuts by Saudi Arabia and Russia, alongside supply fears driven by the potential for conflict between Russia and Ukraine to disrupt Russian oil shipments in the Black Sea region.
Baden Moore, head of commodity and carbon strategy markets at National Australia Bank said crude markets were likely to show a supply deficit through the second half of this year, but it would be by less than OPEC’s forecast for a deficit of around 2 million barrels a day in the September quarter.
“Although our supply deficit forecast is lower, we expect it is enough to push prices over $90/bbl through 2H23,” Moore added.