Brent up on bullish oil demand projections
The front-month ICE Brent contract gained $1.80/bbl on the day, to trade at $77.07/bbl at 09.00 GMT.
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Upward pressure:
Brent futures gained upward momentum after the International Energy Agency (IEA) forecasted global oil demand to grow in 2024.
The Paris-headquartered agency expects global oil consumption to grow by 1.1 million b/d in 2024, up by 130,000 b/d from last month’s forecast due to improving oil demand scenarios in growing economies.
Moreover, the US Federal Reserve (Fed) indicated rate cuts in 2024, at its latest monetary policy meeting. The anticipation of lower interest rates had added upward price pressure on Brent, analysts said.
“Recent key economic data and events supported the current gain in oil prices seen in the last two days,” said OANDA’s market analyst Kelvin Wong.
“Oil [Brent] prices have seen a bit of a “demand pull” factor due to the improved liquidity conditions after the US Federal Reserve’s dovish pivot on Wednesday,” he further added.
Downward pressure:
Global oil supply is expected to increase in 2024 due to a rise in non-OPEC production, which may put downward pressure on Brent prices, analysts said.
The IEA expects crude oil production to grow in the US, Brazil, and Guyana, contributing to a rise in global output in the coming year. If an oil surplus occurs, it could potentially drag Brent prices lower.
“Non-OPEC+ production is expected to drive gains in 2024, with the United States [US] leading the expansion,” SPI Asset Management’s managing partner Stephen Innes said. “OPEC+ is projected to decline in market share in 2023, reaching its lowest level since 2016,” he further added.
By Aparupa Mazumder
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