Oil Rally as OPEC Retains Demand Forecast
Oil market rally as the Organisation of Petroleum Exporting Countries (OPEC) keeps demand forecast unchanged. Brent rose by 0.25% to $82.98 per barrel.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $78.03 per barrel, up 0.21% from Monday’s close of $77.87 per barrel.
OPEC left its demand forecasts unchanged in its latest monthly report and expects oil demand in 2024 to grow by 2.25 million barrels per day (mbpd) and then by a further 1.85 mbpd in 2025.
In its note, ING commodities strategists noted that OPEC is quite aggressive with its demand growth forecasts, which are well above the 1.2mbpd growth that the IEA forecasts for this year.
As for non-OPEC supply, the group lowered output estimates by around 150k b/d to 1.19m b/d for 2024. OPEC cut its output estimates for Russia, the US, Kazakhstan and Oman, although this was partially offset by expectations for stronger output from Guyana.
OPEC production in January fell by 350k b/d month on month to 26.34mbpd. Lower output was expected, given the additional voluntary cuts from a handful of members.
However, a large share of this reduction (162k b/d) was driven by Libya, which is not part of the cuts, and indicates that some who announced additional voluntary cuts fell short of their target – such as Iraq.
Inventory numbers from the American Petroleum Institute (API) overnight were a mixed bag. The API reported a large build of 8.52m barrels in US crude oil inventories while Cushing stocks are also reported to have increased by 500k barrels.
The builds in crude oil were fairly bearish. However, this was offset by large product declines with gasoline and distillate stocks falling by 7.2m barrels and 4m barrels respectively.
The continued outage at BP’s 435k b/d Whiting refinery will have contributed to the crude builds and product draws, according to ING.
Elsewhere, the US dollar index, which measures the US dollar’s value against other currencies, decreased by 0.14% to 104.707 compared to Tuesday’s closing price. The weak dollar is expected to raise demand by making oil cheaper for foreign currency holders.
The oil market managed to edge higher yesterday despite the stronger-than-expected US CPI print for January. ICE Brent settled 0.94% higher on the day, taking it closer to the US$83 per barrel level.
US consumer inflation printed at 3.1% in January, higher than estimates of 2.9%. Similarly, the Consumer Price Index exceeded expectations of a gain of 0.2%, rising 0.3% in January compared to the previous month. #Oil Rally as OPEC Retains Demand Forecast
