Brent on tenterhooks as global demand jitters overwhelm supply concerns
The front-month ICE Brent contract has declined by $0.44/bbl on the day from Friday, to trade at $81.05/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent's price is finding a little solace in the prospect of an oil supply shortage next year.
“We expect ongoing [crude output] cuts from OPEC+ to contribute to inventory draws and upward oil price pressure in the early part of 2024,” the US Energy Information Administration (EIA) has said in its short-term energy outlook report.
Saudi Arabia will continue its voluntary crude oil reduction of 1 million b/d for December as well, an official source from Saudi Arabia's Ministry of Energy told Saudi Press Agency. In addition, Russia has announced additional voluntary oil export cuts of 300,000 b/d until December, according to state-owned media agency TASS.
Saudi Arabia’s energy minister Abdulaziz bin Salman Al Saud has said global oil demand is “not weak," according to Bloomberg. The recent Brent sell-off is merely a “ploy” by market speculators despite robust demand, Abdulaziz argued.
Downward pressure:
Price pressure has been mounting as demand concerns have started to surpass fears of a supply shortage. Weak export data from China has stirred speculations of shrinking oil demand growth. China’s exports have fallen by 6.4% compared to 2022, Reuters reported, citing customs data.
An unexpected 11.9 million-bbl build in commercial US crude inventories reported by the American Petroleum Institute (API) last week sparked concerns about a decline in oil demand. Official data from the US Energy Information Administration has been delayed and will be released later today.
Oil traders' attention has shifted from “tight supply supported by Saudi production cuts” and the Israel-Hamas conflict to a “weakening demand outlook” in Europe, the US and China, according to Ole Hansen, head of commodity strategy at Saxo Bank.
By Konica Bhatt
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