Brent inches higher amid demand growth expectations
The front-month ICE Brent contract has gained by $0.02/bbl on the day, to trade at $68.05/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
A big inventory draw in the US and interest rate cut by the US Federal Reserve have put upward pressure on Brent’s price today.
Commercial US crude oil inventories have declined by 9.3 million bbls to touch 415 million bbls for the week ending 12 September, according to data from the US Energy Information Administration (EIA).
“The drop [in US crude stocks] comes as exports almost doubled from the week before, while imports fell,” remarked two analysts from ING Bank.
A drop in US crude stocks typically signals higher demand and can lend support to Brent's price.
Additionally, the US Federal Open Market Committee (FOMC) cut its key interest rate by 25 basis points yesterday, to a range between 4.00-4.25%.
The move was “widely expected,” ING Bank’s analysts said. This marks the first interest rate cut in 2025. Lower US interest rates can spur demand by making dollar-priced oil cheaper for foreign buyers.
Downward pressure:
Brent’s price has felt some downward pressure as market participants remain focused on the supply glut expected by the end of this year.
Notably, the International Energy Agency (IEA) has projected the global oil market to remain oversupplied, with supply growth outpacing global oil demand in both 2025 and 2026.
The IEA now expects global oil supply to grow by 2.7 million b/d to average 105.8 million b/d in 2025 and rise by another 2.1 million b/d to average about 107.9 million b/d in 2026.
The energy agency sees “muted demand growth,” due to limited consumption in emerging economies and declining demand in industrialised nations, according to ING Bank’s analysts.
By Aparupa Mazumder
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