DTN Weekly Oil Update
Oil Tracks Equity Rebound Ahead of Key Data Releases
VIENNA (DTN) -- Oil futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange extended gains Monday. Retreating U.S. recession fears and supply outages supported prices, but concerns about weak Chinese oil demand growth are not dissipating. Even the Organization of Petroleum Exporting Countries, which so far this year has unwaveringly held on to the bullish narrative of strong Asian growth, may be getting ready to strike a more realistic tone.
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Over the past several months, outlooks on global oil demand growth have darkened as both oil consumption in the OECD and economic growth in China disappointed to the downside. This led most major forecasting agencies to repeatedly revise lower demand growth expectations for this and next year, with only OPEC holding on to its bullish view. On Monday, OPEC in its latest Oil Market Report finally trimmed growth forecasts for this and next year by 135,000 barrels per day (bpd) and 70,000 bpd, respectively. While these downward revisions still leave 2024 growth expectations at more than twice the pace of other agencies, they may have broken the narrative dam -- be it as a concession to less optimistic market voices, or as groundwork for postponing a possible production hike starting in October.
The Energy Information Administration in its Short-Term Energy Outlook last week left its 2024 demand growth forecast unchanged at 1.1 million bpd but cut 2025 expectations by 200,000 bpd. The International Energy Agency, which last month called for less than 1 million bpd in global demand growth, is set to publish its August oil report Tuesday.
Industrial production and manufacturing indexes for the U.S., China and Europe are scheduled for release this week together with domestic consumption indicators. On Wednesday, all eyes will be on the penultimate U.S. CPI reading before the Federal Reserve's September meeting.
Karim Bastati, karim.bastati@dtn.com, www.dtn.com
Karim Bastati can be reached at karim.bastati@dtn.com