Oil prices retain strength despite OPEC cutting demand forecasts
Investing.com — Oil prices rose Wednesday, with sentiment continuing to be boosted by the expectation of stimulus measures in top importer China, even as a group of top producers cut its forecasts for demand growth in 2024 and 2025.
At 09:25 ET (14:25 GMT), Brent oil futures rose 1.1% to $73.00 a barrel, while West Texas Intermediate crude futures gained 1.3% to $69.47 a barrel.
Oil buoyed by China stimulus, in line US CPI
Oil prices have seen gains this week after China – the world’s biggest oil importer – pledged to loosen monetary policy and enact more targeted stimulus measures to boost economic growth.
The announcement ramped up hopes that Chinese oil demand will recover on stronger economic growth. Trade data showing a sharp increase in Chinese oil imports through November also aided sentiment.
Still, traders were awaiting more insight into Beijing’s plans for increased stimulus. The Central Economic Work Conference, which began earlier Wednesday and runs for two days, is expected to offer more cues.
Geopolitical tensions have also kept oil’s risk premium in play, as traders awaited the formation of a new government in Syria after rebels ousted President Bashar al-Assad.
Also helping the tone was in the inline US consumer price index, released earlier Wednesday, which suggested that the Federal Reserve is likely to cut interest rates once more next week, potentially lifting economic activity n the world’s largest energy consumer.
OPEC cuts demand forecasts, again
This positive sentiment has remained in place even after the Organization of the Petroleum Exporting Countries, known as OPEC, cut its forecasts for oil demand growth this year and next earlier Wednesday, its fifth consecutive downward revision.
In a monthly report, OPEC said it expects 2024 global oil demand to rise by 1.61 million barrels per day (bpd), down from 1.82 million bpd last month. OPEC had kept the 2024 outlook unchanged until August, a view it had first taken in July 2023.
Weak demand, particularly in China, and non-OPEC+ supply growth were two factors behind the move, the report said.
OPEC+, which also includes allies like Russia, earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.
US inventories see unexpected build- API
Data from the American Petroleum Institute showed on Tuesday that US oil inventories unexpectedly grew by about 0.5 million barrels in the week to December 6, against expectations for a draw of 1.3 mb.
The API data also showed increases in gasoline and distillate inventories for a second straight week, indicating some resilience in US supplies amid record-high oil production in the country.
Demand is also expected to dwindle with the winter season, likely keeping inventories high in the coming months.
The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday.
(Ambar Warrick contributed to this article.)
