Oil Prices Maintain Strong Position Amid Positive Demand Growth Predictions

Oil prices remained close to recent highs on Friday as the OPEC producer group and the International Energy Agency (IEA) offered promising outlooks for global demand.

Brent crude experienced a marginal 0.1% decrease, settling at $86.28 per barrel at 0910 GMT, while U.S. West Texas Intermediate (WTI) crude futures saw a slight decline of 0.1% to $82.75. Both benchmarks have been on a steady upward trend since June, with WTI hitting its peak for the year on Thursday and Brent reaching its highest level since late January.

The IEA’s latest update emphasized the potential for a significant reduction in global oil inventories throughout the latter part of 2023, possibly propelling prices even higher. However, the agency anticipates a deceleration in demand growth to around 1 million barrels per day (bpd) in 2024, marking a decrease of 150,000 bpd from its previous forecast. OPEC echoed similar sentiments, maintaining its projections for a 2.25 million bpd increase in global oil demand for 2024, consistent with this year’s growth of 2.44 million bpd. Notably, these forecasts remained unchanged from the previous month.

Market sentiment was further boosted by Thursday’s release of U.S. consumer price data for July, fostering speculation that the Federal Reserve is nearing the conclusion of its aggressive rate hike cycle. In terms of supply, ongoing output reductions by key players Saudi Arabia and Russia, coupled with concerns about potential disruptions to Russian oil shipments in the Black Sea region due to geopolitical tensions with Ukraine, have lent additional support to the prevailing price strength. However, mixed economic indicators from China, including a substantial 14.5% drop in overall exports and declining consumer and factory gate prices, have introduced an element of uncertainty regarding fuel demand in the world’s second-largest economy.