😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Oil settles higher on forecasts for strong demand

Published 11/06/2024, 10:59 am
Updated 12/06/2024, 08:37 am
© Reuters. Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices settled slightly higher on Tuesday as the U.S. Energy Information Administration (EIA) raised its global oil demand growth forecast for the year, while OPEC stuck to its forecast for relatively strong growth in 2024.

Brent crude futures rose 29 cents, or 0.4%, to $81.92 a barrel, continuing a sharp recovery as fears of oversupply have ebbed since Brent closed at $77.52 a week earlier, its lowest since February.

U.S. West Texas Intermediate (WTI) crude futures gained 16 cents, or 0.2%, to settle at $77.90.

The EIA raised its 2024 world oil demand growth forecast to 1.10 million barrels per day from a previous estimate of 900,000 bpd.

The Organization of the Petroleum Exporting Countries (OPEC) maintained its 2024 forecast for relatively strong growth in global oil demand, citing expectations for travel and tourism in the second half.

This month, OPEC and allies agreed to extend most oil output cuts well into 2025 but said they would phase out the cuts over the course of a year from October 2024.

"We're now at least considering the idea that maybe demand will pick up in the second half, and the market may actually need some additional OPEC+ supply," said Tim Evans, an independent energy analyst.

"The market was becoming somewhat oversold... We're getting a bit of a trampoline effect," Evans added.

U.S. crude oil output in 2024 is expected to rise more than previously forecast to 13.24 million barrels, its highest ever, EIA said.

U.S. crude oil stocks fell by 2.428 million barrels in the week ended June 7, according to market sources citing American Petroleum Institute figures. Inventories were expected to have fallen by slightly over one million barrels last week, a preliminary Reuters poll showed.

The World Bank said the U.S. economy's stronger-than-expected performance prompted it to lift its 2024 global growth outlook slightly, but warned overall output would remain well below pre-pandemic levels through 2026.

Mostly strong U.S. economic data and inflation still higher than the Fed's target have pushed financial markets to limit expectations to only two 25-basis points rate reductions this year, likely starting in September. Economists have said there was a considerable risk of only one or no rate cuts in 2024.

U.S. consumer prices data for May and the conclusion of the Fed's two-day policy meeting are both scheduled for Wednesday.

The European Central Bank should persist in restraining economic growth given the ample inflationary pressures and wait with its next rate cut until uncertainty recedes, ECB chief economist Philip Lane said on Tuesday.

Traders were also cautious a day ahead of the release of macroeconomic data from China.

Saudi crude exports to China fell for a third straight month.

© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

Global crude oil and oil products shipments taking the long route between Asia, the Middle East and the West are up 47% since attacks began on vessels using the shorter Red Sea route, the EIA said.

Meanwhile, Hamas accepted a U.N. resolution backing a plan to end the war with Israel in Gaza and was ready to negotiate details, a senior official of the Palestinian militant group said, in what the U.S. Secretary of State called a hopeful sign.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.