The International Energy Agency (IEA) released a positive prediction on oil demand for the upcoming year, and a weaker dollar helped oil prices increase on Friday, setting up a first weekly advance in two months. As of $77.12 per barrel, Brent futures were up 51 cents, or 0.7%, higher. Crude oil prices for the United States increased by 52 cents, or 0.7%, to $72.10. A mid-week declaration by the U.S. Federal Reserve that it may lower borrowing costs next year had both benchmarks headed for a tiny weekly rise. After hints from the U.S. central bank that interest rate hikes have probably come to a halt and that lower borrowing prices are on the horizon in 2024, the dollar dropped to a four-month low on Thursday. Friday saw little change in the dollar index.
Oil priced in U.S. dollars is less expensive for overseas buyers when the dollar declines. With improved U.S. demand prospects and lower oil prices, the International Energy Agency (IEA) predicted that global oil consumption would increase by 1.1 million barrels per day (bpd) in 2024, up 130,000 bpd from its previous estimate. The demand growth estimate for 2024 is less than half of the 2.25 million barrels per day (bpd) predicted by the Organization of the Petroleum Exporting Countries (OPEC). Oil priced in U.S. dollars is less expensive for overseas buyers when the dollar declines.
With improved U.S. demand prospects and lower oil prices, the International Energy Agency (IEA) predicted that global oil consumption would increase by 1.1 million barrels per day (bpd) in 2024, up 130,000 bpd from its previous estimate. The demand growth estimate for 2024 is less than half of the 2.25 million barrels per day (bpd) predicted by the Organization of the Petroleum Exporting Countries (OPEC). “OPEC+ production cuts are likely to keep the oil market in balance at the beginning of 2024, which should allay concerns about the current oversupply,” Commerzbank stated. OPEC+, an alliance comprising Russia and other OPEC members, decided in late November to implement voluntary cuts of roughly 2.2 million barrels per day for the duration of the first quarter.
Nevertheless, weak economic indicators from China, the world’s largest oil importer, and Germany, the largest economy in Europe, put pressure on prices. China’s statistics bureau revealed data on Friday that indicated refinery runs in November fell to their lowest point since the beginning of 2023. This was due to a combination of factors including low diesel consumption and margin pressure on non-state owned refiners, which caused them to reduce production. The statistics also revealed stronger-than-expected performance in industrial output and improved retail sales, which helped to alleviate some of the market’s anxiety despite China’s persistent problems with its real estate market and its weak post-COVID economic return.
