Oil prices rose around 1% on Wednesday, buoyed by market optimism despite OPEC’s decision to slash demand growth forecasts for 2024 and 2025. Brent crude futures increased by 74 cents, or 1.03%, to $72.93 per barrel by 1310 GMT, while U.S. West Texas Intermediate (WTI) crude rose 76 cents, or 1.1%, to $69.35. Earlier in the session, Brent reached $73.22, and WTI peaked at $69.62, reflecting anticipation of rising demand.
This marked the fifth consecutive time OPEC has revised its demand forecasts downward, citing weaker consumption trends, particularly in China, and an increase in non-OPEC+ supply. “OPEC’s estimates continue to adjust to market realities, reducing year-over-year growth expectations,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
However, some analysts remain optimistic.
Giovanni Staunovo of UBS noted that demand growth is expected to outpace non-OPEC+ supply, signaling potential market tightening in 2024.
China, a key driver of global oil consumption, has unveiled plans to adopt an “appropriately loose” monetary policy in 2025, its first such easing in 14 years. This move, aimed at boosting consumer spending, has spurred optimism for higher oil demand.
China’s crude imports in November also signaled recovery, rising over 14% year-on-year for the first time in seven months. Financial strategist Li Xing Gan highlighted expectations that Beijing’s economic pivot could inject momentum into the oil market, further supporting prices.
Geopolitical tensions added to the market’s dynamics. Reports suggest the U.S. is considering tougher sanctions on Russia’s oil trade to curtail revenue supporting its war efforts. The Kremlin criticized the move, accusing the Biden administration of escalating tensions in U.S.-Russia relations.
Meanwhile, U.S. crude oil and fuel inventories grew last week, according to industry data from the American Petroleum Institute. Crude stocks increased by 499,000 barrels, gasoline inventories surged by 2.85 million barrels, and distillate stocks rose by 2.45 million barrels.
Official data from the U.S. Energy Information Administration (EIA) was being expected with analysts forecasting a 900,000-barrel decline in crude stocks but a 1.7-million-barrel rise in gasoline inventories.
As oil markets balance OPEC’s tempered outlook, China’s potential demand recovery, and evolving geopolitical risks, prices remain volatile but show resilience, reflecting cautious optimism for 2024.
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