Brent keeps its ground amid a gloomy macroeconomic backdrop
The front-month ICE Brent has gained by $0.11/bbl on the day, to trade at $84.82/bbl at 09.00 GMT.
PHOTO: Crude oil pumps in snow. Getty Images
Upward pressure:
Energy-focused investment research firm HFI Research has projected higher oil prices in the near future.
“The oil market deficit is here. Storage draws over the coming weeks will be profoundly eye-opening,” HFI Research has explained, and “Iran is already back on the market leaving no supply-side surprise.” In addition, “global oil demand, while not as strong as we would like, continues to improve and has not disappointed to the downside.”
Oil market sentiment could be bolstered by rising jet fuel demand in China, according to ANZ commodity strategist Daniel Hynes.
“China’s weekly flights have surged 13% above pre-COVID levels in the week ending 20 August. International travel is picking up, with bookings for overseas group tours during National Day holiday in October more than tripled a month ago,” Hynes has written in a social media post.
Downward pressure:
A sharp rise in Brent futures has been restricted by the possibility of additional crude oil supplies from Venezuela, Iran, and Iraq.
“Recent shifts in the supply landscape underscore a less optimistic perspective on the trajectory of crude oil prices. Despite certain positive aspects, significant challenges and uncertainties persist,” said Stephen Innes, managing partner at SPI Asset Management.
Brent is also facing headwinds due to concerns about economic uncertainty in China and recent statements from the US and European central bankers, who supported higher borrowing rates to tackle inflation.
Investment bank Nomura has lowered its projection for China’s GDP growth and inflation amid growing risk of a “double dip” in the country's economy, and “Beijing’s tepid response to date,” Nomura’s chief China economist, Ting Lu wrote in a research note.
By Konica Bhatt
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