Brent Nears $86 over Crude Oil Supply Tightening
Market prices of crude oil have continued to climb amidst geopolitical tension while OPEC+ output cut extension. The supply side tightening pushed the price of Brent near $86 per barrel, up more than 10% since the start of the month, according to ING commodities strategists note.
Oil group cuts mean that the market should tighten further into the third quarter, suggesting that there is still room for the market to move higher from current levels.
Price rose despite weak demand outlook from China and the United States. Industrial production and refining activity in China slumped, according to recent data. At the same time, the US had previously reported surprise crude inventories surge in last data from the American Petroleum Institute.
Weak demand outlook from the world’s largest oil consumer, the US, was upturned by latest report by the Energy Information Administration -EIA.
The EIA reported that US commercial crude oil inventories declined by 2.55 million barrels over the last week. The draw was driven by an increase in exports, which were up 1.23 million barrels per day week-on-week, while imports fell by 1.25 million barrels per day week on week.
Refined products also saw inventory declines with gasoline and distillate stocks falling by 2.28 million barrels and 1.73 million barrels respectively.
Brent forecast for 3Q-2024 remains unchanged at $88 per barrel, ING said, added that EIA’s weekly inventory report would have added to the positive sentiment in the market.
Analysts said part of this draw would have been due to lower refinery run rates, which fell 1.5pp over the week. However, stronger demand also played a key role.
Implied demand for total refined products increased by 1.86m b/d, with increases in gasoline, distillate, jet and fuel oil demand. Meanwhile, European natural gas prices continue to trade in a relatively volatile manner. Capital Raise: Fidelity Bank Shares Drop N14.4bn in Market Value
