- OPEC leaves forecast for world oil-demand growth unchanged
Myra P. Saefong and William Watts, MarketWatch
SAN FRANCISCO/NEW YORK
Energiesnet.com 06 13 2023
Oil futures finished higher on Tuesday for the first time in four sessions, finding support as China’s economic stimulus plans, including a cut to a key interest rate by the central bank, lifted prospects for energy demand.
Crude prices recovered most of the ground lost in a Monday rout that sent the global crude benchmark to its lowest close since December 2021.
- West Texas Intermediate crude for July delivery CL00, -0.37% CL.1, -0.37% CLN23, -0.37%, the U.S. benchmark, rose $2.30, or 3.4%, to settle at $69.42 a barrel on the New York Mercantile Exchange after losing nearly 4.4% on Monday.
- July Brent crude BRN00, -0.13%, the global benchmark, climbed $2.45, or 3.4%, at $74.29 a barrel on ICE Futures Europe, a day after dropping 3.9% to mark the lowest finish since December 2021.
- Back on Nymex, July gasoline RBN23, -0.80% rose 3% to $2.56 a gallon, while July heating oil HON23, -0.22% added 3.7% at $2.40 a gallon.
- July natural gas NGN23, -0.56% rose 3.3% to $2.34 per million British thermal units.
Demand from China has been a key concern for oil traders. Disappointment in the rebound in demand following the country’s lifting of COVID curbs late last year has been cited as a factor in crude price weakness this year.
However, China’s “shift towards stimulus measures has brought in fresh support” for oil, said Robbie Fraser, manager, global research & analytics at Schneider Electric, in daily commentary. “Those efforts include an unexpected rate cut this week by the People’s Bank of China, with hopes a more dovish policy could translate to stronger growth in the year ahead.”
On Tuesday, the People’s Bank of China said it cut the interest rate on seven-day repurchase operations to 1.9% from 2%. The cut may guide down the nation’s benchmark loan prime rate, which will be released next Tuesday.
Brent dropped 3.9% on Monday to end the session at its lowest since December 2021, while a 4.4% tumble for WTI took it to its lowest close since March 17.
Worries over the outlook for global crude demand as investors await a Wednesday decision by the Federal Reserve, which is expected to leave its key interest rate on hold but signal that some further tightening may yet be in store, have been blamed for a slide that’s seen front-month futures for Brent and WTI down nearly 14% in the year to date.
Data Tuesday showed that U.S. consumer prices edged up by 0.1% in May, while the so-called core rate of inflation that omits food and energy climbed by 0.4%.
The May inflation report “appears to confirm that inflation is moving in the right direction, though not clearly enough to call a definitive end to inflation,” said Jason Pride, chief of investment strategy and research at Glenmede.
It’s likely the Federal Open Market Committee will “see enough progress here to warrant skipping a rate hike at its meeting this Wednesday in order to get a better read on the lagged impact of its significant tightening thus far,” said Pride, in emailed commentary.
Crude prices maintained gains after the Organization of the Petroleum Exporting Countries, or OPEC, in its monthly report released Tuesday, left its 2023 forecast for growth in global oil demand unchanged at 2.3 million barrels a day, or mb/d.
Additional OPEC production cuts kicked in beginning in May. The report said OPEC-13 crude oil production in May decreased by 464,000 barrels a day to average 28.06 mb/d, based on data from available secondary sources.
The Energy Information Adminstration’s weekly petroleum supply report will be released Wednesday morning.
On average for the week ended June 9, analysts expect the report to show supply climbs of 770,000 barrels for crude, 460,000 barrels for gasoline, and 1 million barrels for distillates, according to a survey conducted by S&P Global Commodity Insights.
marketwatch.com 06 13 2023