Friday, May 24, 2024

Oil markets are leaning towards OPEC’s “optimism” rather than the Energy Agency’s “desperation”.


Oil markets are leaning towards OPEC’s “optimism” rather than the Energy Agency’s “desperation”.

On Thursday, global oil markets saw positive moves following the simultaneous release of two reports by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency.

At exactly 13:25, Brent crude was at $80.12 a barrel, up one cent from Wednesday’s close, while US West Texas Intermediate crude was down 10 cents at $76.65 a barrel.

OPEC remained optimistic about the outlook for global oil demand despite economic challenges, and raised its forecast for demand growth to 2023 with a slight slowdown next year, with China and India continuing to lead fuel consumption.

In its monthly report, OPEC expects global oil demand to increase by 2.25 million barrels per day in 2024 from growth of 2.44 million barrels per day in 2023.

It raised its forecast for demand growth to 90,000 bpd in 2023 from last month’s report.

Demand growth is an indication of the potential strength of the oil market and forms part of the underlying backdrop for policy decisions taken by OPEC and its partners in OPEC Plus. Last June, the group extended production cuts to 2024 to support the market.

“In 2024, strong global economic growth, coupled with continued improvement in China, is expected to lead to an increase in oil consumption,” OPEC said in a statement. “OPEC’s proactive approach and production controls have added a great deal of stability to the global oil market, which is the basis for expecting a continuation of a strong oil market until 2024,” he pointed out.

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OPEC’s oil production rose by 91,000 barrels per day to 28.19 million barrels per day in June, led by Iran and Iraq, the report showed, despite production cuts promised by OPEC Plus.

Contrary to the optimism of “OPEC”, the view of the International Energy Organization is evident in its report on Thursday, which revised its outlook due to the global economic slowdown, expecting global demand for oil to reach 102.1 million barrels in 2023. per day.

While that’s a record high, the company said in its monthly report, “A major economic reversal, manifested by a growing slowdown in the manufacturing sector, prompted this year’s first revision of growth estimates for 2023. .”

The Paris-based firm added, “Global demand for oil is under severe environmental pressures due to the dramatic tightening of monetary policy in many developed and developing countries over the past 12 months.”

Nevertheless, demand will be 2.2 million barrels higher than it was in 2022, as China is behind “70 percent of the total increase,” while demand from OECD countries (which will remain weak), however, is expected to slow to 1.1. million in 2024, according to the agency’s report.

In June, the International Energy Agency predicted for the first time a peak in global oil demand “by the end of the decade” due to reliance on the electric car.

Russian exports fell from 600,000 barrels per day in June to 7.3 million barrels, the lowest level “since March 2021”. Revenues associated with these exports also fell by about $1.5 billion to $11.8 billion, the IEA said, “close to half of their level a year ago.”

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• Stable Chinese demand

Notably, data from the General Administration of Customs in China supported OPEC’s view on demand growth, with the country’s crude oil imports on Thursday rising 45.3 percent year-on-year in June, posting the second-highest monthly figure. , amid an increase in refineries for cargoes despite sluggish domestic demand.

According to the data, total crude imports in June were 52.06 million tonnes or equivalent to 12.67 million barrels per day. The increase is significant compared to imports of 8.72 million barrels per day in June last year amid echoes of widespread shutdowns to combat “Covid-19” in the economy.

Imports also rose 4.58 percent from May, which recorded 12.11 million barrels per day, and continued to rise on a monthly basis.

Total imports in the first half stood at 282.07 million tonnes, up 11.7 percent from 252.52 million tonnes in the same period last year.

Refineries in eastern China’s Shandong ramped up operations amid authorities lifting restrictions on diluted bitumen imports at the end of June. But more broadly, inventories continue to rise on a backdrop of macroeconomic uncertainty.

China imported 10.39 million tonnes of natural gas in June, up 19.2 percent from 8.72 million tonnes a year earlier, as importers cut spot purchases as global LNG prices rose.

Total gas imports in the first half stood at 56.63 million tonnes, up 5.8 percent over the same period last year.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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