Oil edges higher amid worry about demand

Oil prices stuttered on Wednesday after sliding to their lowest in more than three months in the previous session, weighed down by concerns over waning demand in the world’s top oil consumers, the US and China.

Brent crude futures ticked up slightly by 4c to $81.65 a barrel by 3.33am GMT, while US crude futures dipped 14c to $77.24 a barrel. Both declined to the lowest since July 24 on Tuesday.

“The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance,” said Warren Patterson and Ewa Manthey, analysts from ING Bank, in a note to clients. They were referring to an easing in tight oil supply conditions.

US crude oil stocks rose by almost 12-million barrels last week, market sources said late Tuesday, citing American Petroleum Institute figures.

The US Energy Information Administration (EIA) will delay the release of weekly inventory data until the week of November 13.

Crude oil production in the US this year will rise by slightly less than previously expected while demand will fall, the EIA said on Tuesday.

The EIA now expects total petroleum consumption in the country to fall by 300,000 barrels a day (bbl/day) in 2023, reversing its earlier forecast of a 100,000bbl/day increase.

The agency also forecast Venezuela’s crude oil production will increase by less than 200,000bbl/day to an average of 900,000bbl/day by the end of 2024 under easing of US sanctions.

Further tempering supply tightness concerns, analysts from Goldman Sachs estimated seaborne net oil exports by six Opec countries, which announced cumulative production cuts worth 2-million barrels a day since April 2023, remain at only 0.6-million barrels a day below April levels.

Data in China, the world’s biggest crude oil importer, also raised doubts about the demand outlook.

Crude oil imports by the world’s second-biggest economy in October showed robust growth but its total exports of goods and services contracted at a quicker pace than expected, adding to the fear of lower global energy demand.

Adding to pressure on oil prices was a modest recovery in the dollar from recent lows, which makes oil more expensive for holders of other currencies.

On the brighter side, the oil producing group Opec expects the global economy to grow and drive fuel demand, despite economic challenges, including high inflation and interest rates. 

Reuters