Brent stable as oil market focuses on demand growth prospects
The front-month ICE Brent contract inched $0.07/bbl up on the day, to trade at $82.70/bbl at 09.00 GMT.
PHOTO: Silhouette of oil pumps. Getty Images
Upward Pressure:
Brent futures have increased as the oil market shifts its focus towards the promising outlook of global oil demand recovery.
The Organisation of the Petroleum Exporting Countries (OPEC) upheld its forecast, projecting a strong global oil demand growth of 2.25 million b/d in 2024 and 1.85 million b/d in 2025, according to its latest monthly oil market report.
Additionally, the American Petroleum Institute (API) reported a significant decline of 5.5 million bbls in commercial US crude inventories for the week ending 8 March, indicating an uptick in demand in the US.
“A larger-than-expected and across-the-board weekly drawdown in US crude and refined product stocks reported by the American Petroleum Institute was also supportive of sentiment early Wednesday,” analysts at VANDA Insight noted.
Furthermore, Brent's price rose following reports of multiple Ukrainian airstrikes on Russian energy facilities. A Ukrainian unmanned aerial vehicle (UAV) reportedly struck an oil refinery in central Russia’s Ryazan Region, leading to casualties, as cited by state-owned media agency TASS, quoting Russian governor Pavel Malkov.
Downward pressure:
Meanwhile, Brent futures felt some downward pressure as OPEC's monthly oil market report revealed that many of its member nations exceeded their designated production quotas.
Specifically, Iraq reduced its production by 14,000 b/d in 2024, falling short of the agreed output cuts of 214,000 b/d.
“Crude oil traded with a negative bias as a few OPEC+ members produced more than their production quota,” ANZ Bank’s senior commodity analyst Daniel Hynes commented. He noted that Iraq remains “non-compliant” for the second consecutive month.
Hynes also highlighted concerns about Russia’s oil shipments, stating that the country appears to be deviating from its commitment to reduce exports, as tanker tracking data indicate weekly exports climbing to 3.7 million b/d.
By Tuhin Roy
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