Oil price rising: optimism about demand pushes crude oil higher again.
The quotes Brent and WTI have rebounded this week, after suffering a sell-off triggered by the OPEC+ plan to return some production this year, which would add to the robust supply from outside the group.
The supply/demand balance has appeared rather unbalanced in recent months in favor of excess supplies. Weak and uncertain forecasts on global economic recoverywith China a great unknown and Europe still shaky in growth, have weighed on estimates relating to crude oil consumption.
However, optimistic global demand forecasts from the Energy Information Administration and OPEC in latest reports, bolstered by industry data showing US crude inventories fell more than expected last week, have reignited crude.
The oil price is risingwith Brent futures above 82 dollars a barrel (0.82%) and those on WTI at 78.62 dollars a barrel (+0.95%).
Oil, the price increases for this reason
Oil prices extend gains into June 12 session.
There Energy Information Administration raised its growth forecasts global oil demand in 2024 at 1.10 million barrels per day compared to a previous estimate of 900,000 barrels per day, while OPEC maintained its 2024 forecast of relatively strong oil consumption, citing expectations for travel and tourism in the second half.
The oil cartel itself, which greatly influences price trends, remains positive regarding future prospects. The group maintained its forecast of strong demand in the second half of this year, with estimates being more bullish than other industry players.
“Crude oil rose as OPEC maintained its forecast for stronger demand”analysts at ANZ said in a note, adding that oil consumption will likely be driven by China and other emerging economies. “Despite announcing last week that it will begin phasing out some of the voluntary cuts later this year, OPEC forecasts suggest it should be easily absorbed by the market”.
“We saw a sizable deficit in the third quarter, which suggests that i prices still have room to rise”said Warren Patterson, head of commodity strategy for ING Groep NV in Singapore. “The oil balance will be restrictive in the near term”.
Of note, prices fell more than 2% last week after the cartel and its allies said they would phase out production cuts starting in October. The fear was of an excess of crude oil relative to the strength of demand.
Meanwhile, the US crude oil inventories fell by 2.428 million barrels in the week ended June 7, according to market sources citing data from the American Petroleum Institute. The drop was larger than analysts polled by Reuters had expected.
