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Business News/ Markets / Commodities/  Brent inches 1% higher to $86/bbl as OPEC sticks to 2024 oil demand, IEA downgrades on macro concerns

Brent inches 1% higher to $86/bbl as OPEC sticks to 2024 oil demand, IEA downgrades on macro concerns

OPEC stuck to its forecast for relatively strong growth in global oil demand in 2023 in 2024, citing signs of a resilient world economy so far this year and expected further demand gains in China.

The logo of the OPEC. (File Image) (REUTERS)Premium
The logo of the OPEC. (File Image) (REUTERS)

Oil prices rose on Thursday on expectations that US interest rates had peaked, but gains were capped by a large build in US crude stockpiles and a forecast for slower demand growth next year from the International Energy Agency (IEA). The Organisation of Petroleum Exporting Countries (OPEC) has stuck to its forecast for relatively strong growth in global oil demand in 2023 in 2024, citing signs of a resilient world economy so far this year and expected demand gains in China.

Brent futures rose 92 cents, or 1.1 per cent, at $86.74 per barrel, and US West Texas Intermediate crude gained 68 cents, or 0.8 per cent, at $84.17 a barrel. Prices pared gains after US government data showed US crude inventories rose by 10.2 million barrels in the last week to 424.2 million barrels, according to news agency Reuters.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a October 19 expiry, was last trading lower by 1.17 per cent lower at 6,935 per bbl, having swung between 6,905 and 7,101 per bbl during the session so far, against a previous close of 7,017 per barrel.

Also Read: Global oil market sensitive to Israel-Hamas war; Russia ready to boost supplies to Saudi Arabia: Novak

What's driving crude oil prices?

-US crude output also hit a record 13.2 million barrels per day in the week. Supporting crude futures earlier, world shares rose and the dollar and bond market borrowing costs held steady. European Central Bank meeting minutes that will add to the debate on where interest rates are heading.

-Saudi Energy Minister Prince Abdulaziz bin Salman said in a Russian TV interview that it was necessary to be proactive on bringing stability to the oil market, which had recently been hit by concerns that the Israel-Hamas war could disrupt supplies from the Middle East. 

-Russian Deputy Prime Minister Alexander Novak also said on Thursday that Russia will further ease its fuel exports ban if necessary. Last week, it lifted restrictions on pipeline diesel supplies.

-The IEA lowered its oil demand growth forecast for 2024, suggesting harsher global economic conditions and progress on energy efficiency will weigh on consumption. The agency now sees 2024 demand growth at 880,000 barrels per day (bpd), compared with its previous forecast of 1 million bpd. However, it raised its 2023 demand forecast to 2.3 million bpd from a forecast of 2.2 million.

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OPEC sticks to 2024 oil demand forecast

The world oil demand will rise by 2.25 million barrels per day (bpd) in 2024, compared with growth of 2.44 million bpd in 2023, said OPEC in its monthly report. Both forecasts were unchanged from last month.

A lifting of pandemic lockdowns in China has helped oil demand rise in 2023. OPEC has consistently forecast stronger demand growth for next year than other forecasters such as the IEA. "In 2024, solid global economic growth, amid continued improvements in China, is expected to further boost oil consumption," OPEC said in the report.

The report also said that demand in the rest of this year and next could take a hit in some parts of the world and trimmed its forecasts for total world demand in the current quarter and the first three months of 2024.

"Looking ahead and despite the usual seasonal rise in heating oil demand, ongoing uncertainty and economic developments in OECD Europe and other areas are expected to impact oil demand in the remainder of 2023 and in 2024," OPEC said in reference to Organisation for Economic Co-operation and Development nations.

Where are oil prices headed?

“An increase in US oil inventories contributed to the downward pressure on crude oil prices. According to the US API report, crude oil stockpiles in the US increased by approximately 13 million barrels last week. Nevertheless, the dollar index's moderation provided some support to crude oil prices at lower levels,'' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd

‘’We anticipate that crude oil prices will exhibit volatility in today's trading session. Crude oil finds support in the range of $80.60 to $79.80, with resistance at $82.20 to $83.10 for today's session. In terms of the Indian Rupee (INR), crude oil has support at 6,920 to 6,840, while resistance is at 7,080 to 7,150,'' added Kalantri.

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Published: 12 Oct 2023, 10:26 PM IST
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